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 28FE
To determine
Calculated the maximum investment.
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Explain how the viewpoint established before a public sector analysis is started can turn an estimate from being categorized as a disbenefit to a cost, or vice versa.
Toll lanes on a section of the 1-40 freeway are being considered in order to reduce traffic congestion and travel times.
Since this is a government project, the B-C ratio method must be applied in the evaluation. The following are cost and other estimates:
Construction costs $18,500,000
Operating and maintenance costs = $690,000 per year
Projected service life = 20 years
Savings in travel times and revenues generated from the tolls = $3,060,000 in the first year of operation and projected to increase by 1.8% per year due to the projected annual increase in traffic.
In addition, environmental analysis estimates that the project will result in increased noise and air pollution that will cause an additional societal health cost of $864,000 the first year and is also
projected to increase at 1.8% per year.
Assuming zero market (salvage) value at the end of 20 years and a MARR of 13% per year, should the toll lanes be constructed?
Click the icon to view the interest and annuity table for…
The 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
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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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- The estimated present cost to start a proposed municipal government project is $5,500,000. The annual operation cost of the project is $70,000. The estimated benefits from this project to the public are $470, 000 per year, and the estimated existing disbenefits are $100,000 per year. The project has an estimated life of 20 years. a) Calculate the modified B/C ratio at an interest rate of 6% per year, and determine if it is economically justified. b) Calculatetheprofitabilityindexataninterestrateof6% peryear.arrow_forwardThe B/C ratio of an investment of $10,000 that provides a benefit of $1,500 at the beginning every year for 10 years is __________, if money is worth 9%.arrow_forwardThe B/C ratio of an investment of $3,000 which gives $1600 at the end every year for 6 years is __________, if money is worth 9%. Group of answer choices 2.4 2.0 1.8 2.3arrow_forward
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- Four mutually exclusive projects are being considered for a new 2-mile jogging track. The life of the track is expected to be 85 years, and the sponsoring agency's MARR is 9% per year. Annual benefits to the public have been estimated by an advisory committee and are shown below. Use the B-C method (incrementally) to select the best jogging track. Initial cost Annual benefits B-C ratio The best jogging track is alternative A $52,000 $7,500 1.60 Perform the incremental B-C Analysis. Fill-in the table below. (Round to two decimal places.) Alternative A с B D B $62,000 $10,500 1.88 C… Alternative Inc. B-C ratio 1.60 C $57,000 $9,000 1.75 D $150,000 $19,000 1.41 Is the alternative acceptable? Yes Yes Yes Yesarrow_forwardA county will invest $4,100,000 to clean up a chemical spill that occurred following a natural disaster. At the end of the 10-year planning horizon, an additional $900,000 will be spent in restoring the site to an environmentally acceptable condition. The investment is expected to produce net annual benefits that will decrease by 29% each year. The net annual public benefit in the 1st year is estimated to be $2,500,000. Determine the B/C ratio for the investment using a 5% MARR. Click here to access the TVM Factor Table calculator. B/C= Carry all interim calculations to 5 decimal places and then round your final answer to 3 decimal places. The tolerance is ±0.003.arrow_forwardCalculate the modified and conventional B-C Ratio using AW in four decimal places. Is the project acceptable?arrow_forward
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