Engineering Economy (17th Edition)
17th Edition
ISBN: 9780134870069
Author: William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher: PEARSON
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Chapter 10, Problem 11P
To determine
Calculate the benefit cost ratio.
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Students have asked these similar questions
A proposal to reduce traffic congestion on Jounieh Highway has a B/C
ratio of 1.4. The annual worth of benefits minus disbenefits is $560,000.
What is the first cost of the project if the interest rate is 5% per year and
the project is expected to be perpetual?*
4,000,000
4,588,208
8,000,000
6,666,667
Locations under consideration for a border patrol station have their costs estimated by the federal government. Use the B/C ratio
method at an Interest rate of 9.00% per year to determine which location to select, if any. (Round the final answer to three decimal
places.)
Location
Initial Cost, $
Annual Cost, $ per Year
Disbenefits, $ per Year
Life, Years
The AB/C ratio is -928888.889 ✪
Select location.
N
North N
1,360,000
480,000
70,000
South S
2,900,000
400,000
45,000
0
Two alternatives, identified as X and Y, are evaluated using the B/C method. Alternative Y has a higher total cost than X. If the B/C ratios are 1.2 and 1.0 for alternatives X and Y, respectively, which alternative should be selected? Why
Chapter 10 Solutions
Engineering Economy (17th Edition)
Ch. 10 - Prob. 1PCh. 10 - Prob. 2PCh. 10 - Prob. 3PCh. 10 - A retrofitted space-heating system is being...Ch. 10 - Prob. 5PCh. 10 - Prob. 6PCh. 10 - Prob. 7PCh. 10 - Prob. 8PCh. 10 - Prob. 9PCh. 10 - Prob. 10P
Ch. 10 - Prob. 11PCh. 10 - Prob. 12PCh. 10 - Prob. 13PCh. 10 - Prob. 14PCh. 10 - Prob. 15PCh. 10 - Prob. 16PCh. 10 - Four mutually exclusive projects are being...Ch. 10 - Two municipal cell tower designs are being...Ch. 10 - Prob. 19PCh. 10 - Prob. 20PCh. 10 - Prob. 21PCh. 10 - Prob. 22PCh. 10 - You have been requested to recommend one of the...Ch. 10 - Prob. 24PCh. 10 - Prob. 25PCh. 10 - Prob. 26FECh. 10 - Prob. 27FECh. 10 - Prob. 28FECh. 10 - Prob. 29FECh. 10 - Prob. 30FECh. 10 - Prob. 31FE
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- 10. Calculate (a) the conventional B/C ratio, (b) the modified B/C ratio, and (c) the PI for the following cash flow estimates at a discount rate of 10% per year. a) 0.91, 0.72, 1.04 Item PW of benefits, S AW of disbenefits, S/year First cost, S M&O costs, S/year Life of project, years b) 1.04, 0.91, 1.21 c) 0.72, 0.91, 0.97 Cash Flow 3,800,000 45,000 1,200,000 300,000 20 d) 1.12, 1.26, 1.04 e) 1.15,0.98. 1.32arrow_forwardThe benefits associated with a nuclear power plant cooling water filtration project located on the Ohio River are $12,000 per year forever, starting in year 1. The costs are $25,000 in year O and $25,000 at the end of year 2. At /= 10% per year, calculate the B/C ratio to determine if the project is justified economically. The B/C ratio will be [ The project is economically [justifedarrow_forwardThe two alternatives shown are under consideration for improving security at a facility. Determine which one should be selected, if any, based on a B/C analysis. Consider an interest rate of 7% per year and a 10-year study period. Additional information is provided in Table Q 6(b). Page 4 of 5 Table Q 6(b) Alternative 1: Extra Cameras | Alternative 2: New Sensors First cost, $ Annual O&M cost, $ 38000 87000 49000 64000 Annual benefits, $ Annual disbenefits, $ 110000 160000 26000arrow_forward
- The modified B/C ratio for a city-owned hospital heliport project is 1.7. The initial cost is $0.6 million, annual benefits are $150,000, and the estimated life is 29 years. What is the amount of the annual M&O costs used in the calculation at a discount rate of 6% per year? The annual M&O costs is $ .arrow_forwardA shopping center is to be built in one of four different cities. The cash flow estimates associated with each alternative are given below. You will be using the conventional B/C ratio method to determine which city should be selected at an interest rate of 15% per year. One alternative must be selected. The following table shows the details of each alternative. Alternative Benefits, s/year Disbenefits, $/year ERR City1 95 12 8 170 City2 Life, years First cost, $ M&O costs, $/year Please find the following - B/C of City1 ✓ Incremental B/C of City1 vs. City3 30 110 55 12 210 30 City3 90 12 8 160 30 City4 105 15 10 180 25 Based on the incremental B/C analysis applied to all four cities, choose one city among the four cities. A. 1.22 B. City3 C. 0.00 D. City2 E. 2.50 F. 1.00 G.1.19 H.City4 1. City1 J. 2.24 K. 1.48arrow_forwardA manager wants to compare between two alternatives by the B/C method; if the overall B/C ratio for both alternatives is calculated to be exactly 1.0, which alternative should the manager select? Select one: a. do nothing alternative b. Select both alternatives c. Select the alternative that has the higher cost d. Select the alternative based on the probability to occurarrow_forward
- The following estimates (in $1000 units) have been developed for a new cybersecurity system at Chicago's O'Hare Airport. Calculate the conventional B/C ratio at a discount rate of 10% per year. First cost, $ AW of benefits, $ per year FW (in year 20) of disbenefits, $ M&O costs, $ per year Expected life, years O 1.21 <1.15 1.52 O 1.91 DOCUMENT.pdf 13,000 3,800 6,750 400 20arrow_forwardProblem 2. Compare the following mutually exclusive alternatives using the conventional incremental B/C ratio with annual worth to determine the most economical alternative with an interest rate of 15% per year. The Do Nothing option does not exist. X Y Initial Cost ($) Maintenance cost ($/yr) Income ($/yr) Life (years) 50K 75K 25K 20K 25K 30K 120K 170K 150K 10 15 20arrow_forwardWhen a B/C analysis is conducted, the benefits and costs: (a) Must be expressed in terms of their present worth values (b) Must be expressed in terms of their annual worth values (c) Must be expressed in terms of their future worth values (d) Can be expressed in terms of PW, AW, or FWarrow_forward
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