A DOT is performing a benefit-cost analysis of a new highway using an analysis period of 40 years as part the required environmental impact assessment of the project. The section of highway is estimated to have a construction cost $230 million dollars. The public benefit in reduced travel time and economic development around the highway is estimated to be $12 million per year for the first 5 years, then decrease by 3% per year for the remainder of the 40 year analysis period as congestion grows and economic development slows. The public disbenefit is estimated to be $1.1 million dollars in year O due to additional congestion and pollution during construction, then average $110,000 per year over the 40-year project life in environmental costs due to increased runoff and vehicle emissions. Using an interest rate of 4%, determine the benefit- cost ratio for this project using public/government version of the B/C ratio. Express your answer to two decimal places.

A DOT is performing a benefit-cost analysis of a new highway using an analysis period of 40 years as part the required environmental impact assessment of the project. The section of highway is estimated to have a construction cost $230 million dollars. The public benefit in reduced travel time and economic development around the highway is estimated to be $12 million per year for the first 5 years, then decrease by 3% per year for the remainder of the 40 year analysis period as congestion grows and economic development slows. The public disbenefit is estimated to be $1.1 million dollars in year O due to additional congestion and pollution during construction, then average $110,000 per year over the 40-year project life in environmental costs due to increased runoff and vehicle emissions. Using an interest rate of 4%, determine the benefit- cost ratio for this project using public/government version of the B/C ratio. Express your answer to two decimal places.

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter17: Long-term Investment Analysis

Section: Chapter Questions

Problem 10E

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