The cost of grading and spreading gravel on a short rural road is expected to be $300,000. The road will have to be maintained at a cost of $25,000 per year. Even though the new road is not very smooth, it allows access to an area that previously could only be reached with off-road vehicles. The improved accessibility has led to a 150% increase in the property values along the road. If the previous market value of a property was $900,000, calculate the B/C ratio using an interest rate of 6% per year and a 20-year study period. ENGINEERING ECONOMICS Lesson: Economic Study Methods
The cost of grading and spreading gravel on a short rural road is expected to be $300,000. The road will have to be maintained at a cost of $25,000 per year. Even though the new road is not very smooth, it allows access to an area that previously could only be reached with off-road vehicles. The improved accessibility has led to a 150% increase in the property values along the road. If the previous market value of a property was $900,000, calculate the B/C ratio using an interest rate of 6% per year and a 20-year study period. ENGINEERING ECONOMICS Lesson: Economic Study Methods
Chapter11: Cash Flow Estimation And Risk Analysis
Section: Chapter Questions
Problem 10P
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The cost of grading and spreading gravel on a short rural road is expected to be
$300,000. The road will have to be maintained at a cost of $25,000 per year. Even though the new road is not very smooth, it allows access to an area that previously could only be reached with off-road vehicles. The improved accessibility has led to a 150% increase in the property values along the road. If the previous market value of a property was $900,000, calculate the B/C ratio using an interest rate of 6% per year and a 20-year study period.
ENGINEERING ECONOMICS
Lesson: Economic Study Methods
Transcribed Image Text:5. The cost of grading and spreading gravel on a short rural road is expected to be
$300,000. The road will have to be maintained at a cost of $25,000 per year. Even though
the new road is not very smooth, it allows access to an area that previously could only be
reached with off-road vehicles. The improved accessibility has led to a 150% increase in
the property values along the road. If the previous market value of a property was
$900,000, calculate the B/C ratio using an interest rate of 6% per year and a 20-year
study period.
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