USAA is considering adding a new runway and has 3 options for the runway surface: asphalt, concrete, and a mixture of both. The benefit from all 3 alternatives is the same. Therefore, these projects are cost-based alternatives, and the cash flows are provided in the table below. Using conventional benefit/cost ratio with MARR of 9%, which alternative should be selected? First cost AW of resurfacing cost Asphalt Concrete Mixture $250,000,000 $350,000,000 $400,000,000 $30,000,000 $20,000,000 $10,000,000 Disbenefits at construction time $5,000,000 Life, years Asphalt is better Concrete is better The Mixture is better 20 $10,000,000 20 $12,000,000 20

USAA is considering adding a new runway and has 3 options for the runway surface: asphalt, concrete, and a mixture of both. The benefit from all 3 alternatives is the same. Therefore, these projects are cost-based alternatives, and the cash flows are provided in the table below. Using conventional benefit/cost ratio with MARR of 9%, which alternative should be selected? First cost AW of resurfacing cost Asphalt Concrete Mixture $250,000,000 $350,000,000 $400,000,000 $30,000,000 $20,000,000 $10,000,000 Disbenefits at construction time $5,000,000 Life, years Asphalt is better Concrete is better The Mixture is better 20 $10,000,000 20 $12,000,000 20

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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The cash flows for the following four alternatives are given below. You may assume the benefits occur throughout the year rather than just at the end of the year. Based upon payback period, the alternative that should be selected is given by the following option: Year A B C D 0 -$1000 -$900 -$950 -$2783 1 200 100 350 1200 2 200 200 350 1200 3 1200 300 350 1200 4 1200 300 350 1200 5 1200 700 350 1200 Group of answer choices B C A Select none D
The Logan Well Services Group is considering two sites for storage and recovery of reclaimed water. The mountain site (MS) will use injection wells that cost $4.2 million to develop and $280,000 per year for M&O. This site will be able to accommodate 150 million gallons per year. The valley site (VS) will involve recharge basins that cost $11 million to construct and $400,000 per year to operate and maintain. At this site, 720 million gallons can be injected each year. If the value of the injected water is $3.00 per thousand gallons, which alternative, if either, should be selected according to the B/C ratio method? Use an interest rate of 8% per year and a 20-year study period. The B/C ratio is . Select alternative (Click to select) neither of the alternatives mountain site valley site .
Engineering economy - ENGR 3322 A new municipal refuse-collection truck can be purchased for $84,000. Its expected useful life is six years, at which time its market value will be zero. Annual receipts less expenses will be approximately $18,000 per year over the six-year study period. At MARR of 19%, calculate the benefit-cost ratio of the project a. 53 b. 63 c. 73 d. None of the choices
■Consider the following four mutually exclusive alternatives, each with a 10-yr life. X Y Z $4,000 $1,500 $750 710 300 167.5 Cost If the MARR is 10%, which alternative should be selected? Solve the problem by using: Uniform annual benefit a) The payback period b) Benefit-cost ratio analysis
The five mutually exclusive alternatives shown below are under consideration for improving visitor safety and access to additional areas of a national park. If all alternatives are considered to last indefinitely, determine which should be selected on the basis of a rate of return analysis using an interest rate of 10%. A B C D E_ First cost, $ millions -20 -40 -35 -90 -70 Annual M&O cost, $ millions -2 -1.5 -1.9 -1.1 -1.3 Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.
Blue Whale Moving and Storage recently purchased a warehouse building in Santiago. The manager has two good options for moving palletsof stored goods in and around the facility. Alternative 1 includes a 4000-pound capacity, electric forklift (P = $-30,000; n = 12 years; AOC =$-1000 per year; S = $8000) and 500 new pallets at $10 each. The forklift operator’s annual salary and indirect benefits are estimated at $32,000.Alternative 2 uses two electric pallet movers (“walkies”) each with a 3000-pound capacity (for each mover, P = $-2000; n = 4 years; AOC = $-150 per year; no salvage) and 800 pallets at $10 each. The two operators’ salaries and benefits will total $55,000 per year. For both options, new palletsare purchased now and every two years that the equipment is in use. (a) If the MARR is 8% per year, use tabulated factors to determine which alternative is better. (b) Rework using a spreadsheet solution.
build a modelAn industrial park is being planned for a tract of land near a river. To prevent flood damage to the industrial buildings that will be built on this low-lying land, an earthen embankment can be constructed. The height of the embankment will be determined by an economic analysis of the costs and benefits.The following data have been gathered (Tables 1 and 2). The embankment is expected to last 40 years and will require no maintenance.Whenever the flood water flows over the embarkment, a $310,000 in annual damages occur. The corporation uses an interest rate of 15% a) if they build the embarkment, what height should it have? Table 1 Table 2 Embankment Height Above Roadway (m) Initial Cost ($) Embankment Height Above Roadway (m) Avg Frequency That Flood Level Will Exceed heigh of embarkment 2.0 $ 100,000.00 2.0 Once in 3 years 2.5 $ 165,000.00 2.5 Once in 8 years 3.0 $ 300,000.00 3.0 Once in 25 years 3.5…
USE PRESENT WORTH. Show complete solution and cash flow diagram There is a continuing requirement for stand by electrical power at a public utilityservice facility. Alternative A involves an initial cost of $72,000, a 3-year useful life.and an annual cost of $2,200 the first year and increasing $300 per year thereafterand a net salvage value of $8,400 at the end of the useful life. Alternative B has aninitial cost of $90,000. a six-year useful life, and annual cost of 2,100 and a netsalvage value of $13,000. The current interest rate is 10% annually. Whatalternative are you going to recommend if you use the repeatability (studyperiod is 6 years) and co terminated (study period is 3 years, epsilon = 10%) assumptions?
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 firm spent $2 million for new equipment that reduces greenhouse gases in their operations. The process improvement saved them $14,000 in the first month. (a) What is the first month’s rate of return on this investment? Express that value on an annual effective basis. (b) If this investment was judged not to make economic sense, should some entity pay to reduce such emissions? Who and why?
The city of Oakmont is interested in developing some lake front property into a sports park (picnic facilities, boat docks, swimming area, etc.). A consultant has estimated that the city would need to invest $3 million in this project. In return, the developed property would return $500,000 per year to the city through increased tax revenues and recreational benefits to the public. Whatwould the life of this project need to be in order to be cost-beneficial to the city? The interest rate on municipal bonds is 6% per year.
A one-mile section of a roadway in Florida has been washed out by heavy rainfall. The county is considering two options for rebuilding the road. Pertinent data are presented below. If the county's MARR for this type of project is 9% per year, which replacement option should be chosen? Assume repeatability. 1) The equivalent uniform annual cost for the asphalt option is $ ? 2) The equivalent uniform annual cost for the concrete option is $ ? 3) Select the ? option.