Metro has initiated discussions on attracting rail service. A depot would need to be constructed, which would require $2.5million in land and $7.5 million in construction costs. Annual operating and maintenance costs (O&M) for the facility would be $150,000, and personnel costs would be an additional $110,000. Other assorted costs would be born by the railroad and federal authorities. Annual benefits (B) of the rail service are estimated as listed: $120,000 for Railroad annual payments, $25,000 for Rail tax charged to passengers, $20,000 for Convenience benefits to local residents, and $12,000 for Additional tourism dollars for Metro. Apply the B-C ratio method, with a MARR of 8% per year and 20 year study period, to determine if the rail service should be established. a. BC ratio=2.12, good project b. BC ratio=-1.76, good project c. BC ratio=1.69, good project d. BC ratio=0.14, not good project
Metro has initiated discussions on attracting rail service. A depot would need to be constructed, which would require $2.5million in land and $7.5 million in construction costs. Annual operating and maintenance costs (O&M) for the facility would be $150,000, and personnel costs would be an additional $110,000. Other assorted costs would be born by the railroad and federal authorities. Annual benefits (B) of the rail service are estimated as listed: $120,000 for Railroad annual payments, $25,000 for Rail tax charged to passengers, $20,000 for Convenience benefits to local residents, and $12,000 for Additional tourism dollars for Metro. Apply the B-C ratio method, with a MARR of 8% per year and 20 year study period, to determine if the rail service should be established. a. BC ratio=2.12, good project b. BC ratio=-1.76, good project c. BC ratio=1.69, good project d. BC ratio=0.14, not good project
Purchasing and Supply Chain Management
6th Edition
ISBN:9781285869681
Author:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson
Publisher:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson
ChapterC: Cases
Section: Chapter Questions
Problem 5.2SB
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Metro has initiated discussions on attracting rail service. A depot would need to be constructed, which would require $2.5million in land and $7.5 million in construction costs. Annual operating and maintenance costs (O&M) for the facility would be $150,000, and personnel costs would be an additional $110,000. Other assorted costs would be born by the railroad and federal authorities. Annual benefits (B) of the rail service are estimated as listed: $120,000 for Railroad annual payments, $25,000 for Rail tax charged to passengers, $20,000 for Convenience benefits to local residents, and $12,000 for Additional tourism dollars for Metro. Apply the B-C ratio method, with a MARR of 8% per year and 20 year study period, to determine if the rail service should be established.
a.
BC ratio=2.12, good project
b.
BC ratio=-1.76, good project
c.
BC ratio=1.69, good project
d.
BC ratio=0.14, not good project
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