The following data is provided for a PPP project. To the People To the Government $1.8 million now and $200.000 every 3 years $12d000 per year Benefits $95,000 per year beginning now Cost Disbenefits $35.000 per year Savings Calculate the modified benefiticost ratios using an interest rate of 10% per year and an infinite project period. The modified B/C ratio is 0.7882
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- 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?Is the Benefit-cost analysis a decision-making tool for systematically developing useful information about desirable and undesirable effects of public projects? How?From the following data for a PPP project, calculate the (a) conventional, and (b) modified benefit/ cost ratios using an interest rate of 6% per year and an infinite project period. To the People To the Government Benefits: $100,000 per year beginning now Costs: $1.8 million now and $200,000 every 3 years Disbenefits: $60,000 per year Savings: $90,000 per year
- 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 .The following estimates (in $1000 units) have been developed for a security system upgrade at Chicago’s O’Hare Airport. (a) Calculate the conventional B/C ratio at a discount rate of 10% per year. Is the project justified? (b) Determine the minimum first cost that is possible to render the project just economically unjustified. Item Cash Flow First cost, $ 13,000 AW of benefits, $ per year 3,800 FW of disbenefits, year 20, $ 6,750 M&O costs, $ per year 400 Life, years 20A consultant, after 3 months of work, reported that the modified B/C ratio for a city-owned hospital heliport project is 1.7. If the initial cost is $1 million and the annual benefits are $150,000, what is the amount of the annual M&O costs used in the calculation? The report stated that a discount rate of 6% per year and an estimated life of 30 years were used.
- A public-private partnership has been formed between a city, county, and construction/management company to attract a professional athletic team to the area. Assume you are the engineer with the company and are assisting with the benefit/cost analysis. The primary options are to construct a domed arena (DA) or a conventional stadium (CS), one of which will definitely be built. The DA option will cost $200 million to construct, have a useful life of 50 years, and require M&O costs of $360,000 the first year, increasing by $10,000 per year thereafter. In 25 years, a remodeling expenditure of $4,800,000 is predicted. The CS option will cost only $50 million to construct, have a useful life of 50 years, and require M&O costs of $175,000 the first year, increasing by $8000 per year. Periodic costs for repainting and resurfacing for the stadium are estimated at $100,000 every 10 years, except in year 50. Revenue from DA is expected to be greater than that from CS by $10,900,000 the…A manager wants to compare between two alternatives by the B/C method; if the overall B/C ratio for both alternatives is calculated to be exactly 1.0, which alternative should the manager select? Select one: a. do nothing alternative b. Select both alternatives c. Select the alternative that has the higher cost d. Select the alternative based on the probability to occurA local government is considering promoting tourism in the city. It will cost$8,000 to develop a plan.111e anticipated annual benefits and costs are as follows:Annual benefits: Increased local income and tax collections $ 125,000Annual support service: Parking lot expansion, restroom. $50,000the patrol car, and street repairIf the city government uses a discount rate of 8% and a study period of fiveyears. is this tourism project justifiable according to the benefit-cost analysis?
- Describe the difficulties involved in the public-project analysis?The California Forest Service is considering two locations for a new state park. Location Ewould require an investment of $3 million and $50,000 per year in maintenance. Location Wwould cost $7 million to construct, but the Forest Service would receive an additional $25,000per year in park use fees. The operating cost of location W will be $65,000 per year. The revenueto park concessionaires will be $500,000 per year at location E and $700,000 per year at locationW. The disbenefits associated with each location are $30,000 per year for location E and $40,000per year for location W. Use(a) The B/C method, and(b) The modified B/C method to determine which location, if either, should be selected, using aninterest rate of 12% per year. Assume that the park will be maintained indefinitely.Calculate the B/C ratio for the following cash flow estimates at a discount rate of 10% per year. Is the project justified? Item Estimate PW of benefits, $ 3,800,000 AW of disbenefits, $/year 45,000 First cost, $ 1,200,000 M&O costs, $/year 300,000 Life, years 20