U.S. route 83 passes through the village of Burr Ridge, IL. The engineers of the Transportation Department have proposed constructing a new highway through existing farmland to bypass the city for use by through traffic. The new bypass would however entail an initial construction cost of $40 million and an average annual maintenance cost of $50,000. Assuming the overall user and non-user costs (associated with the positive and negative impacts) of the new project amount to $2 million per year, facility life of 25 years, and an annual nominal discount rate of 6% compounded quarterly, determine whether the project is worthwhile on the basis of agency costs, user costs, and non-user costs.

The following three mutually exclusive alternative proposals are being considered for flood proofing a factory building that is located in an area subject to occasional flooding by a nearby river. 1. Do nothing: Damage to the building in a moderate flood is $9,000 and in a severe flood it is $23,000. 2. Protect the building with a one-time initial expenditure of $20,000 so that the building can withstand moderate flooding without any damage and withstand severe flooding with only a $12,000 damage. 3. Protect the building with a one-time initial expenditure of $31,000 so that the building can withstand any flooding with no damage at all. In any year, there is a 19% probability of moderate flooding and a 9% probability of severe flooding. Using a MARR of 6% per year and a service life of 20 years, determine which of the three alternatives is the most economical. (a) Calculate EUAC values for each scenario (use negative numbers for costs) The expected EUAC for the "Do Nothing" alternative…

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 =

The 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 S

Problem 09.029 Two Alternative Comparison One of two alternatives will be selected to reduce flood damage in a rural community in central Arizona. The estimates associated with each alternative are available. Use B/C analysis at a discount rate of 8% per year over a 20-year study period to determine which alternative should be selected. For analysis purposes only, assume that the benefits of reduced flood damage are available in years 7, 13, and 18 of the study period. Retention Pond Channel Initial Cost, $ 920,000 2,400,000 Annual Maintenance, $/Year 92,000 30,000 Reduced Flood Damage, $ 200,000 775,000 The AB/C ratio is The alternative that should be selected is the [retention pond