EVALUATING TRANSPORTATION ALTERNATIVES USING ECONOMIC ALTERNATIVE METHODS: The Department of Traffic is considering three improvement plans for a heavily traveled intersection within the city. The intersection improvement is expected to achieve three goals: improve travel speeds, increase safety, and reduce operating expenses for motorists. The annual dollar value of savings compared with existing conditions for each criterion as well as additional construction and maintenance costs is shown in the table below. If the economic life of the road is considered to be 65 years and the discount rate is 3.5%, which alternative should be selected? Annual Annual Saving in Accidents, $ Benefits, $ Annual Travel Annual Construction Cost, $ Operating Savings, $ Additional Maintenance Alternative Time Cost, $ 215,000 5,500 3.300 600 1.500 II 220,000 5,000 6,800 850 2.600 315,000 7,500 6,000 3,100 3,000 Note: Draw the Cash Flow Diagram and then solve using EUAW method.

EVALUATING TRANSPORTATION ALTERNATIVES USING ECONOMIC ALTERNATIVE METHODS: The Department of Traffic is considering three improvement plans for a heavily traveled intersection within the city. The intersection improvement is expected to achieve three goals: improve travel speeds, increase safety, and reduce operating expenses for motorists. The annual dollar value of savings compared with existing conditions for each criterion as well as additional construction and maintenance costs is shown in the table below. If the economic life of the road is considered to be 65 years and the discount rate is 3.5%, which alternative should be selected? Annual Annual Saving in Accidents, $ Benefits, $ Annual Travel Annual Construction Cost, $ Operating Savings, $ Additional Maintenance Alternative Time Cost, $ 215,000 5,500 3.300 600 1.500 II 220,000 5,000 6,800 850 2.600 315,000 7,500 6,000 3,100 3,000 Note: Draw the Cash Flow Diagram and then solve using EUAW method.

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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