Engineering Economy
16th Edition
ISBN: 9780133582819
Author: Sullivan
Publisher: DGTL BNCOM
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Chapter 10, Problem 28FE
To determine
Calculated the maximum investment.
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Q7.2.
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 year
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.
Toll lanes on a section of the 1-40 freeway are being considered in order to reduce traffic congestion and travel times.
Since this is a government project, the B-C ratio method must be applied in the evaluation. The following are cost and other estimates:
Construction costs $18,500,000
Operating and maintenance costs = $690,000 per year
Projected service life = 20 years
Savings in travel times and revenues generated from the tolls = $3,060,000 in the first year of operation and projected to increase by 1.8% per year due to the projected annual increase in traffic.
In addition, environmental analysis estimates that the project will result in increased noise and air pollution that will cause an additional societal health cost of $864,000 the first year and is also
projected to increase at 1.8% per year.
Assuming zero market (salvage) value at the end of 20 years and a MARR of 13% per year, should the toll lanes be constructed?
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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
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