3. CSUN receives a $15 million grant to train middle and high school science and math teachers.The ten-year grant will create an estimated savings of $1.5 million per year in teachers salariesand any student incurred expenses. To fund other ongoing events and activities, an estimated$200,000 per year will be removed from other program funding. Operating costs will be$500,000 per year for program success. Use the modified B/C method via AW with an ROR of6% to identify whether this program is economically justifiable.

The benefit-cost ratio is one of the measures to compare the benefits of an alternative with its…

Answered: CSUN receives a $15 million grant to…

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

See similar textbooks

Similar questions

7 A flood control project with a life of 16 years will require an investment of $55,000 and annual maintenance costs of $6,000. The project will provide no benefits for the first two years but will save $26,000 per year in flood damage starting in the third year. The appropriate MARR is 12% per year. What is the modified B-C ratio for the flood control project?
The Texas Department of Transportation is considering in improving accident prevention countermeasures on the state's accident-prone public highways and bridges. The following set of projects has been recommended for evaluation at three different locations and assumes the budget is $20 million. All alternatives are mutually independent projects. Determine the best combination of projects within the budget constraint.(a) II-Band III-B only(b) I-A, II-A, and III-B(c) 1-B, III-A, and III-B(d) 11-B and IIl-B
Large projects, such as a new tunnel under the Hudson, the Big Dig in Boston, the Denver airport, a new military jet, and a natural gas pipeline from Alaska to the Midwest, often take 5 to 15 years from concept to completion. (a) Should benefit and cost estimates be adjusted for the greater influences and impacts of inflation, government regulatory changes, and changing local economic environments? Why or why not? (b) How does the public budget-making process interact with the goal of accurate benefit and cost estimating for these large projects?
Which statement is not true with respect to estimating the economic impacts of proposed engineering projects? (a) Order-of-magnitude estimates are used for high-level planning. (b) Order-of-magnitude estimates are the most accurate type at about –3 to 5%. (c) Increasing the accuracy of estimates requires added time and resources. (d) Estimators tend to underestimate the magnitude of costs and to overestimate benefits.
A city government is considering two types of town-clump sanitary systems. Design A requires an initial outlay of $400.000 with annual operating and maintenance costs of $50.000 for the next 15 years: design B calls for an investment of $300.000 with annual operating and maintenance coSIS of $80,000 per year for the next 15 years. Fee collections from the residents would be $85.000 per year. The interest rate is 8%. and no salvage value is associated with either system.(a) By the benefit-cost ratio (BC(i)), which system should be selected?(b) If a new design (design C). which requires an initial outlay of $350,000 and annual operating and maintenance costs of $65,000, is proposed, would your answer to (a) change?
Which of the following DOES NOT agree with the definition/description of Benefit-Cost ratio?A. Benefit-Cost ratio can have a value less than 0, but the project is not economically feasible.B. A Benefit-Cost ratio less than 1 means that the benefits are inferior of the costs.C. If conventional Benefit-Cost ratio is less than 1, so does the modified Benefit-Cost ratio.D. If the annual costs = annual benefits, the conventional and modified Benefit-Cost ratios are equal to 0.
The public utility in a medium-sized city is considering two cash rebate programs to improve water conservation. Program 1, expected to cost an average of $60 per household, offers a rebate of 75% of the purchase and installation costs of an ultra low-flush toilet ($100 maximum). This programis projected to achieve a 5% reduction in overall household water use over a 5-year evaluation period. This will benefit the citizenry to the extent of $1.25 per household per month. Program 2 is the replacement of turf grasswith xeriscape landscaping. This is expected to cost $500 per household, but it will result in an average reduced water cost estimated at $8 perhousehold per month. At a discount rate of 0.5% per month, use the B/C method to determine which program(s) the utility should undertakeif the programs are (a) mutually exclusive, and (b) independent.
Which of the following stnLcmcnts is not one of the four fundamental principles of engineering economics?(a) Receiving a dollar today is worth more than a dollar received in the (future.(b) To expect the highest return on investment, you need to take a higher risk.(c) Marginal revenue must exceed the marginal cost to justify any production.(d) When you are comparing different alternatives. you must not focus only on differences in alternatives.
Identify the following projects as primarily public or private sector. (a) Bridge across Ohio River (b) Coal mine expansion (c) Baja 1000 race team (d) Consulting engineering firm (e) New county courthouse building (f) Flood control project (g) Endangered species designation (h) Freeway lighting (lumen increase) (i) Antarctic cruise for you and your spouse ( j) Crop dusting airplane purchase
The following data is provided for a PPP project. To the People To the Government Benefits $95,000 per year beginning now Cost $1.8 million now and $200,000 every 3 years Disbenefits $60,000 per year Savings $115,000 per year 1--Calculate the conventional benefit/cost ratios using an interest rate of 12% per year and an infinite project period. The conventional B/C ratio is . 2--Calculate the modified benefit/cost ratios using an interest rate of 12% per year and an infinite project period. The modified B/C ratio is .
Describe the following methods in transportation evaluation based on multiple criteria: A. Rating and ranking B. Cost effectiveness C. Evaluation as a fact-finding process D. Trade-off and balance-sheet approaches E. Evaluation of completed projects F. Evaluating effects of transportation on social and natural system
The owner of an independent full-service lodging property has reviewed your proposal for the installation of a property management system. The proposal is thorough; it includes all the necessary steps outlined in this chapter. However, the owner says that due to economic conditions at this time, we have to cut back and purchase only five of the eleven modules in the proposal. Which of the five modules would you maintain? Justify your decision. a. Reservations b. Revenue Management c. Registration d. Room Status e. Posting f. Call Accounting g. Back Office h. Housekeeping i. Food and Beverage j. Marketing and Sales k. Night Audit *Write in at least 1000 count of words.*

SEE MORE QUESTIONS

Recommended textbooks for you

Managerial Economics: Applications, Strategies an…

Economics

ISBN:

9781305506381

Author:

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

Publisher:

Cengage Learning