ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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The conventional B/C ratio estimate of 2.1 was reported to the County Commissioners for a proposed mosquito control program.The person who prepared the report stated that the health benefits were estimated to be $400,000 per year, and that disbenefits of $25,000 per year were used in the calculation. She also stated that the costs for chemicals, machinery, maintenance, and labor were estimated at $150,000 per year. However, she
forgot to list the cost for initiating the program (trucks, pumps, tanks, etc.). If the project has a 10-year study period and an 8%-per-year discount rate, determine the estimated initial cost.
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- The estimated annual cash flows for a proposed municipal government project are costs of $750,000 per year, benefits of $950,000 per year, and disbenefits of $200,000 per year. Calculate the conventional B/C ratio at an interest rate of 10% per year, and determine if it is economically justified. The B/C ratio is The project is economically justifiedarrow_forwarda. Based on PW method, Design Z is more economical. b. The modified B/C ratio of Design Y is The modified B/C ration of Design Z is (Round to two decimal places) (Round to two decimal places) c. The incremental B/C ratio is (Round to two decimal places) Therefore, based on the B/C ratio method, Design Z is more economical d. The discounted payback period of Design Y is The discounted payback period of Design Z is years (Round to one decimal place) years (Round to one decimal place) Investment cost Annual revenue Annual cost Useful life Salvage value Net PW Therefore, based on the payback period method, Design y would be preferred. (e) Why could the recommendations based on the payback period method be different from the other two methods? ⒸA. because the payback period method ignores the cash flows after the payback period O B. because the payback period gives more weight to the cash flows after the payback period C Design Y Design Z $140,000 $275,000 $57,659 $96.354 $17.618 $31,687 15…arrow_forwardNote:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.arrow_forward
- From the following data, use the conventional B/C ratio for a project that has a 20-year life to determine if it is economically justified. Use an interest rate of 8% per year. Consequences To the People Annual benefits = $135,000 per year Annual disbenefits = $10,000 per year The B/C ratio is The project is [[(Click to select) To the Government First cost = $700,000 Annual cost Annual savings $141,000 per year $30,000 per year E =arrow_forwardThe city of Valley View, California, is considering various proposals regarding the disposal of used tires. All proposals involve shredding, but the benefits differ in each plan. An incremental B/C analysis was initiated, but the engineer conducting the study left recently. Using a 20 year study period and an interest rate of 8% per year, a. Fill in the blanks in the incremental B/C columns of the table below b. Which alternative should be selected? Alternative P Q R S PW of Cost $ Million 10 40 50 80 B/C Ratio 1.1 2.4 1.4 1.8 AB/C Ratio (when compared with Alternative) P R Q 2.83 2.83 Sarrow_forwardNot use Ai and chatgpt please.arrow_forward
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