Engineering Economy
16th Edition
ISBN: 9780133582819
Author: Sullivan
Publisher: DGTL BNCOM
expand_more
expand_more
format_list_bulleted
Question
Chapter 10, Problem 24P
To determine
Calculated the new incremental cost benefit ratio
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
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 $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…
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…
Explain how the viewpoint established before a public sector analysis is started can turn an estimate from being categorized as a disbenefit to a cost, or vice versa.
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
- U.S. route 83 passes through the village of Burr Ridge, IL. The engineers of the Transportation Department have proposed constructing a new highway through existing farmland to bypass the city for use by through traffic. The new bypass would however entail an initial construction cost of $40 million and an average annual maintenance cost of $50,000. Assuming the overall user and non-user costs (associated with the positive and negative impacts) of the new project amount to $2 million per year, facility life of 25 years, and an annual nominal discount rate of 6% compounded quarterly, determine whether the project is worthwhile on the basis of agency costs, user costs, and non-user costs.arrow_forwardThe 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.)arrow_forwardThe citizen-based Capital Improvement Projects (CIP) Committee for the city of Dundee has recommended a $25 million bond issue for the purchase of greenbelt/floodplain land to preserve low-lying green areas and wildlife habitat. Developers oppose the proposal due to the reduction of available land for commercial development. The city engineer and economic development director have made preliminary estimates for some obvious areas over a projected 15-year planning horizon. The inaccuracy of these estimates is made very clear in a report to the Dundee City Council. The estimates are not yet classified as costs, benefits, or disbenefits.arrow_forward
- A company emits 520 tons of dangerous chemicals annually. It has two options for reducing its emissions. Option 1: the company can spend $32,000 annually on a new filtration system, which will cut its emissions to 120 tons. Option 2: In addition to the filtration system, the company could implement a new recycling technology that will cost $24,000 per year and cut emissions to 30 tons. For each ton of reduced emissions, the company saves $240 . First, use marginal analysis to determine which option will save the company the most money. Then, calculate how much money the company will save and enter it in the box below, rounding your answer to two decimal places if necessary.arrow_forwardThe 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.arrow_forwardQ7.2. From the following data, use the conventional B/C ratio for a project which has a 20-year life to determine if it is economically justified. Use an interest rate of 8% per year. Consequences To the People To the Government Annual benefits = $90,000 per year First cost = $750,000 !3! %3! Annual disbenefits $10,000 per year Annual cost = $50,000 per year %3D %3D Annual savings = $30,000 per yeararrow_forward
- * Your answers are incorrect. A county will invest $4,200,000 to clean up a chemical spill that occurred following a natural disaster. At the end of the 9-year planning horizon, an additional $1,000,000 will be spent in restoring the site to an environmentally acceptable condition. The investment is expected to produce net annual benefits that will decrease by 29% each year. The net annual public benefit in the 1st year is estimated to be $2,300,000. Determine the B/C ratio for the investment using a 4% MARR. Click here to access the TVM Factor Table calculator. B/C = 13.499 Carry all interim calculations to 5 decimal places and then round your final answer to 3 decimal places. The tolerance is ±0.003.arrow_forwardThe Adams Construction Company is bidding on a project to install a large flood drainage culvert from Dandridge to a distant lake. If they bid $2,000,000 for the job, what is the benefit-cost ratio in view of the following data? The MARR is 6% per year, and the project’s life is 30 years.arrow_forwardFour mutually exclusive projects are being considered for a new 2-mile jogging track. The life of the track is expected to be 85 years, and the sponsoring agency's MARR is 10% per year. Annual benefits to the public have been estimated by an advisory committee and are shown below. Use the B-C method (incrementally) to select the best jogging track. Initial cost Annual benefits B-C ratio A $60,000 $11,000 1.83 Alternative D Alternative B $140,000 $21,000 1.50 C $56,000 $8,500 1.52 $51,000 $7,000 1.37 Perform the incremental B-C Analysis. Fill-in the table below. (Round to two decimal places.) Inc. B-C ratio Is the alternative acceptable? Yes 1.37 ¯arrow_forward
- Many economists favor a carbon tax as a way to discourage carbon emissions. Suppose such a tax were to be set at $20 per metric ton of carbon emissions (1 metric ton = 1,000 kilograms). Consider a 35% efficient coal-fired powerplant that produces 50MW of electricity. Given the carbon intensity of coal is 24gC/MJ, answer the following: a) What would the annual carbon tax be for this powerplant? Answer: $2.16 million/year b) A tree farm sequesters carbon at the rate of 5,000kg per year per acre over the 40-year life of the farm. What area of forest (in acres) would have to be planted to “offset” the powerplant’s emissions over the next 40 years (roughly the lifetime of the powerplant)? Answer: 21,600 acres c) How much could the powerplant operators pay for the forestry project (in $/acre-year) and still have it be cheaper than paying the $20 per metric ton carbon tax? Answer: $100/acre-yeararrow_forwardApart from its economic strategies, Coca Cola Amatil has identified three main CSR objectives: Sustainable water management, Efficient energy use Reduction in packaging and post-consumer waste. There is ongoing concern at the environmental costs arising from the packaging and distribution of bottled water. Critics argue that the unnecessary transport of water leads to increased carbon emissions. The water used in CCA's bottled water products is sourced locally - from within around two hours' drive of their production plants. The bulk of their water is purchased at market rates from small businesses or farmers. Sourcing water locally means minimal environmental negatives, such as carbon emissions that come from unnecessary transportation of water. Measures such as increased efficiencies in water use, less waste in plant operations and harvesting rain water have helped CCA to maintain world's-best practice in the global Coca-Cola system, with just 1.55 litres of water used per…arrow_forwardE5arrow_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