The city government considers investing on a theme park to be located near the shore. The estimated contract cost is $200M. Those living along the shoreline must be compensated accordingly and the government projects that they need to spend about $50M to give out to the families. The theme park must be maintained by the contractor at a price $2M per year. When the theme park is fully operational, it will accommodate 10,000 tourists per month, and will have an average net sales of $350,000 from ticket sales, less 10% for government taxes. Opening a theme park will also attract more investors within the area due to high volume of tourists and the government estimates to receive $500,000 yearly from the investors. Use B-C ratio to assess the acceptability of the proposal. Use a 15-year study period. MARR is 10% per year.

The city government considers investing on a theme park to be located near the shore. The estimated contract cost is $200M. Those living along the shoreline must be compensated accordingly and the government projects that they need to spend about $50M to give out to the families. The theme park must be maintained by the contractor at a price $2M per year. When the theme park is fully operational, it will accommodate 10,000 tourists per month, and will have an average net sales of $350,000 from ticket sales, less 10% for government taxes. Opening a theme park will also attract more investors within the area due to high volume of tourists and the government estimates to receive $500,000 yearly from the investors. Use B-C ratio to assess the acceptability of the proposal. Use a 15-year study period. MARR is 10% per year.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

The California Forest Service is considering two locations for a new state park. Location Ewould require an investment of $3 million and $50,000 per year in maintenance. Location Wwould cost $7 million to construct, but the Forest Service would receive an additional $25,000per year in park use fees. The operating cost of location W will be $65,000 per year. The revenueto park concessionaires will be $500,000 per year at location E and $700,000 per year at locationW. The disbenefits associated with each location are $30,000 per year for location E and $40,000per year for location W. Use(a) The B/C method, and(b) The modified B/C method to determine which location, if either, should be selected, using aninterest rate of 12% per year. Assume that the park will be maintained indefinitely.
An integrated, combined cycle power plant produces 285MW of electricity by gasifying coal. The capital investment for the plant is $570 million, spread evenly over two years. The operating life of the plant is expected to be 20 years. Additionally, the plant will operate at full capacity 75% of the time (downtime is 25% of any given year). a. If this plant will make a profit of three cents per kilowatt-hour of electricity sold to the power grid, what is the simple payback period of the plant? Is it a low-risk venture? Tabulate the net cash flow and the cumulative PW. b. What is the IRR for the plant? Is it profitable?
The city of Oakmont is interested in developing some lake front property into a sports park (picnic facilities, boat docks, swimming area, etc.). A consultant has estimated that the city would need to invest $3 million in this project. In return, the developed property would return $500,000 per year to the city through increased tax revenues and recreational benefits to the public. Whatwould the life of this project need to be in order to be cost-beneficial to the city? The interest rate on municipal bonds is 6% per year.
You are weighing the economics of installing a triple-glazed energy efficient window system in your building. The following life cycle costs and savings are provided. The study period is 25 years, and the discount rate is 10%. Is this an economically viable approach based on the Savings-to-Investment Ratio (SIR)? Triple- Glazed Energy Efficient Windows: Window Quantity takeoff: 10000 sf Initial Cost: $100/sf Annual Operating Costs: $2.5/sf Annual Energy Saving: $10/sf
A local government is considering promoting tourism in the city. It will cost$8,000 to develop a plan.111e anticipated annual benefits and costs are as follows:Annual benefits: Increased local income and tax collections $ 125,000Annual support service: Parking lot expansion, restroom. $50,000the patrol car, and street repairIf the city government uses a discount rate of 8% and a study period of fiveyears. is this tourism project justifiable according to the benefit-cost analysis?
A local government is considering promoting to urism in the city. It will cost$8,000 to develop a plan. The anticipated annual benefits and costs are as follows:Annual benefits: Increased local income and tax collections $ 125,000Annual support service: Parking lot expansion, rest room. $50,000patrol car, and street repairIf the city government uses a discount rate of 8% and a study period of fiveyears. is this tourism project justifiable according to the benefit-cost analysis?
Curtis Party Rentals offers party equipment such as tents, tables, chairs, and so on for outdoor events. The rental fees average $940 per event. Curtis receives a 15 percent deposit two months before the event, 60 percent the month before, and the remainder on the day the equipment is delivered and set up. Planners at Curtis estimate the following number of events for the last half of the current year: July August September October November December Required: a. What are the expected revenues for Curtis Party Rentals for each month, July through December? Revenues are recorded in the month of the event. b. What are the expected cash receipts for each month, July through October? 330 350 400 310 270 300 Complete this question by entering your answers in the tabs below. Required A Required B What are the expected revenues for Curtis Party Rentals for each month, July through December? Revenues are recorded in the month of the event. July August September October November December…
32. A factory has production capacity of P12,000 units per month with an efficiency of 80% Fixed monthly operating cost = P600,000 Material and labor cost = P200/unit Selling price = P500.00 Determine the monthly profit
The city of Oakmont is interested in developing some lake front property into a sports park (picnic facilities, boat docks, swimming area, etc.). A consultant has estimated that the city would need to invest $3 million in this project. In return, the developed property would return $500,000 per year to the city through increased tax revenues and recreational benefits to the public. What would the life of this project need to be in order to be cost-beneficial to the city? The interest rate on municipal bonds is 4% per year. E Click the icon to view the interest and annuity table for discrete compounding when i= 4% per year. The life of the project needs to be at least years in order to be cost-beneficial to the city. (Round up to the nearest whole number.)
17.3 A self-propelled combine with a four-row 101.6 cm [40 in] corn head has a list price of $40,000. The diesel engine has a maximum power of 91 kW[122 hp). The combine is driven at 6.4 km/hr [4 mi/hr] and at a field efficiency of 65% for an average of 150 hours per year. What is the average cost per hour and per hectare [acre]? The combine is expected to be owned for 10 years. Diesel fuel costs 13¢/L [49¢/gal).
If the local government invests in a project which has a 20 years useful life and initial investment of 2.25 million dollars and the yearly benefit is $250,000, with a maintenance cost (starting in year 1), what is Benefit Cost Ratio (rounded to the whole percentage, no decimals)? none of the given choices 80%, B. С 75%, D. 60%,
A project costing P250,000 yields a yearly benefit of P80,000 for a period of 10 years with no salvage value. At an interest rate of 6%, what is the conventional benefit cost ratio using present worth? ANSWER: Blank 1