Pearson eText for Engineering Economy -- Instant Access (Pearson+)
17th Edition
ISBN: 9780137533138
Author: William Sullivan, Elin Wicks
Publisher: PEARSON+
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Chapter 10, Problem 6P
To determine
Calculate the time period.
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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 $500,000 per year to the city through increased
tax revenues and recreational benefits to the public. What would the life of this project need to be in order to be cost-beneficial to the city? The interest rate on municipal bonds is 4% per year.
E Click the icon to view the interest and annuity table for discrete compounding when i= 4% per year.
The life of the project needs to be at least
years in order to be cost-beneficial to the city. (Round up to the nearest whole number.)
Question 1
You are interested in purchasing a car from the available three options.
CAR-1
CAR-2
CAR-3
First Cost
17856
23456
28678
Operating cost ($/year)
Benefits ($/year)
Disbenefits ($/year)
Life (years)
743
589
321
435
1088
890
85
145
134
12
15
20
Use Incremental B/C analysis to determine which car is better at an interest rate of 9% per year.
Why are benefit cost ratios inappropriate for evaluating alternative projects?
Chapter 10 Solutions
Pearson eText for Engineering Economy -- Instant Access (Pearson+)
Ch. 10 - Prob. 1PCh. 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 - Prob. 29FECh. 10 - Prob. 30FECh. 10 - Prob. 31FE
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- The 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_forwardQ. 3 Large projects, such as a new tunnel under the Hudson, the Big Dig in Boston, the Denver airport, a new military jet, and a natural gas pipeline from Alaska to the Midwest, often take 5 to 15 years from concept to completion. Should benefit and cost estimates be adjusted for the greater influences and impacts of inflation, government regulatory changes, and changing local economic environments? Why or why not? How does the public budget-making process interact with the goal of accurate benefit and cost estimating for these large projects?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_forward
- Why integrating ethics into project research is a crucial task? How check biases and predetermined assumptions on infrastructure within a vastly growing city?arrow_forwardProvide a dissemination process to ensure stakeholders are informed and committed to the plan.? (This should also include a clear outline of the dissemination process that will be used to ensure that stakeholders are informed of the plan and how commitment will be generated)arrow_forward1. Use the first four steps of the decision-making process to generally describe the alternatives and identify what economic-related estimates you will need to complete an engineering economy analysis for the president. 2. Identify any noneconomic factors and criteria to be considered in making the alternative selection. 3. During your inquiries about alternative B from its manufacturer, you learn that this company has already produced a prototype molding machine and has sold it to a company in Germany for $3 million (U.S.dollars). Upon inquiry, you further discover that the German company already has unused capacity on the equipment for manufacturing plastic shells.The company is willing to sell time on the equipment to Innovations immediately to produce its own shells for U.S.delivery. This could allow immediate market entry into the United States.Consider this as alternative C,and develop the estimates necessary to evaluate C at the same time as alternatives A and B.arrow_forward
- If the local government invests in a project which has a 20 years useful life and initial investment of 2.25 million dollars and the yearly benefit is $250,000, with a maintenance cost (starting in year 1), what is Benefit Cost Ratio (rounded to the whole percentage, no decimals)? none of the given choices 80%, B. С 75%, D. 60%,arrow_forwardThe following data are for two mutually exclusive projects: PW(benefits) PW(operating and maintenance costs) PW(capital costs) Project A $20,000,000 $5,000,000 $5,000,000 Project B $15,500,000 $8,000,000 $1,000,000 (a) What is the benefit-cost ratio for Project A (to two decimal points): Number (b) What is the benefit-cost ratio for Project B (to two decimal points): Number (c) What is the modified benefit-cost ratio for Project A (to two decimal points)? Number (d) What is the modified benefit-cost ratio for Project B (to two decimal points)? Number (e) What is the benefit-cost ratio for the increment between projects (to two decimal points)? Number (f) What is the Present Worth of Project A? Number (g) What is the Present Worth of Project B? Number (h) Which is the preferred project (enter either 'A' or 'B')?arrow_forwardAnswer the c and d optionsarrow_forward
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