Engineering Economy
16th Edition
ISBN: 9780133582819
Author: Sullivan
Publisher: DGTL BNCOM
expand_more
expand_more
format_list_bulleted
Question
Chapter 10, Problem 13P
To determine
Calculate the benefit cost ratio.
Expert Solution & Answer
Trending nowThis is a popular solution!
Students have asked these similar questions
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. What would the life of this project need to be in order to be cost-beneficial to the city? The interest rate on municipal bonds is 4% per year.
E Click the icon to view the interest and annuity table for discrete compounding when i= 4% per year.
The life of the project needs to be at least
years in order to be cost-beneficial to the city. (Round up to the nearest whole number.)
Problem Statement
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.
Chapter 10 Solutions
Engineering Economy
Ch. 10 - The Adams Construction Company is bidding on a...Ch. 10 - Prob. 2PCh. 10 - Prob. 3PCh. 10 - A retrofitted space-heating system is being...Ch. 10 - Prob. 5PCh. 10 - Prob. 6PCh. 10 - Prob. 7PCh. 10 - Prob. 8PCh. 10 - Prob. 9PCh. 10 - Prob. 10P
Ch. 10 - Prob. 11PCh. 10 - Prob. 12PCh. 10 - Prob. 13PCh. 10 - Prob. 14PCh. 10 - Prob. 15PCh. 10 - Prob. 16PCh. 10 - Four mutually exclusive projects are being...Ch. 10 - Two municipal cell tower designs are being...Ch. 10 - Prob. 19PCh. 10 - Prob. 20PCh. 10 - Prob. 21PCh. 10 - Prob. 22PCh. 10 - You have been requested to recommend one of the...Ch. 10 - Prob. 24PCh. 10 - Prob. 25PCh. 10 - Prob. 26FECh. 10 - Prob. 27FECh. 10 - Prob. 28FECh. 10 - A flood control project with a life of 16 years...Ch. 10 - Prob. 30FECh. 10 - Prob. 31FE
Knowledge Booster
Similar questions
- Your employer is trying to select from a list of possible capital projects. The projects, along with their cost and benefits, are listed below. The capital budget available is $1 million. In addition to spending constraints, your employer would like to select at least 2 projects. Projects 4 and 1 cannot both be selected together. Formulate the problem as a linear program and determine the optimal solution. Project Cost Net Present Value $260, 000 $290, 000 1 $750,000 2 $740.000 3 $225,000 $550,000 4 $260,000 $760,000 $300,000 $780,000 Which projects should be selected? Project 1 will Project 2 will Project 3 will Project 4 will Project 5 will What is the total net present value of these projects? Total net present valuearrow_forwardA local government is considering promoting to urism in the city. It will cost$8,000 to develop a plan. The anticipated annual benefits and costs are as follows:Annual benefits: Increased local income and tax collections $ 125,000Annual support service: Parking lot expansion, rest room. $50,000patrol 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?arrow_forwardDescribe the net future worth of the project?arrow_forward
- Identify the special cash flow category for each of the following. While developing a new product line, Cook Company spent $3 million two years ago to build a plant for a new product. Ultimately that project was not pursued. You are now evaluating a new project and would locate production inside of this building. What type of cash flow is the cost of the building? You hope to increase membership at your yoga studio by opening a smoothie bar inside of the yoga studio. When considering the feasibility of the smoothie bar, what type of cash flow is the increased studio membership? Suppose Walker Publishing Company is considering bringing out a new finance text whose projected revenues include some revenues that will be taken away from another of Walker's books. What type of cash flow are the lost sales on the older book? You currently operate a taco truck but are considering converting the food truck into a bubble tea truck. What type of cash flow are the profits currently earned…arrow_forwardThe following three mutually exclusive alternative proposals are being considered for flood proofing a factory building that is located in an area subject to occasional flooding by a nearby river. 1. Do nothing: Damage to the building in a moderate flood is $9,000 and in a severe flood it is $23,000. 2. Protect the building with a one-time initial expenditure of $20,000 so that the building can withstand moderate flooding without any damage and withstand severe flooding with only a $12,000 damage. 3. Protect the building with a one-time initial expenditure of $31,000 so that the building can withstand any flooding with no damage at all. In any year, there is a 19% probability of moderate flooding and a 9% probability of severe flooding. Using a MARR of 6% per year and a service life of 20 years, determine which of the three alternatives is the most economical. (a) Calculate EUAC values for each scenario (use negative numbers for costs) The expected EUAC for the "Do Nothing" alternative…arrow_forwardThe following three mutually exclusive alternative proposals are being considered for flood proofing a factory building that is located in an area subject to occasional flooding by a nearby river. 1. Do nothing: Damage to the building in a moderate flood is $11,000 and in a severe flood it is $24,000. 2. Protect the building with a one-time initial expenditure of $20,000 so that the building can withstand moderate flooding without any damage and withstand severe flooding with only a $10,000 damage. 3. Protect the building with a one-time initial expenditure of $32,000 so that the building can withstand any flooding with no damage at all. In any year, there is a 19% probability of moderate flooding and a 9% probability of severe flooding. Using a MARR of 6% per year and a service life of 8 years, determine which of the three alternatives is the most economical. (a) Calculate EUAC values for each scenario (use negative numbers for costs) The expected EUAC for the "Do Nothing" alternative…arrow_forward
- The following three mutually exclusive alternative proposals are being considered for flood proofing a factory building that is located in an area subject to occasional flooding by a nearby river. 1. Do nothing: Damage to the building in a moderate flood is $11,000 and in a severe flood it is $24,000. 2. Protect the building with a one-time initial expenditure of $20,000 so that the building can withstand moderate flooding without any damage and withstand severe flooding with only a$12,000 damage. 3. Protect the building with a one-time initial expenditure of $32,000 so that the building can withstand any flooding with no damage at all. In any year, there is a 21% probability of moderate flooding and a 10% probability of severe flooding. Using a MARR of 8% per year and a service life of 12 years, determine which of the three alternatives is the most economical. (a) Calculate EUAC values for each scenario (use negative numbers for costs) The expected EUAC for the "Do…arrow_forwardThe city of Calgary has a new subdivision, Paradise Mountain, at its outskirts. The city wants to encourage the growth of Paradise Mountain by improving transportation between Paradise Mountain and the centre of Calgary. Two alternatives are being considered: (1) new buses on the route between Paradise Mountain and Calgary and (2) improvement of the road between Paradise Mountain and Calgary. Both projects will have as their main benefit improved transportation between Paradise Mountain and Calgary. Rather than measuring the value of this benefit directly to the city, engineers have estimated the benefit in terms of an increase in the value of land in Paradise Mountain. That is, potential residents are expected to show their evaluations of the present worth of improved access to the town centre by their willingness to pay more for homes in Paradise Mountain. The road improvement will entail construction cost and increased operating and maintenance costs. In addition, the improved road…arrow_forwardThe U.S. Department of Interior is planning to build a dam and construct a hydro- electric power plant. In addition to producing electric power, this project will provide flood control, irrigation, and recreational benefits. The estimated benefits and costs expected to be derived from the three alternatives under consideration are listed as follows:arrow_forward
- List the potential costs, benefits, and disbenefits that should be considered in evaluating a potential nuclear power plant. What stakeholder viewpoints will need to be considered?arrow_forwardConduct a feasibility study for a project that your company is considering. Your report should focus on a financial or economic evaluation of the projectarrow_forwardA 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?arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Managerial Economics: Applications, Strategies an...EconomicsISBN:9781305506381Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. HarrisPublisher:Cengage Learning
Managerial Economics: Applications, Strategies an...
Economics
ISBN:9781305506381
Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:Cengage Learning