Contemporary Engineering Economics (6th Edition)
6th Edition
ISBN: 9780134105598
Author: Chan S. Park
Publisher: PEARSON
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Chapter 16, Problem 11P
To determine
Selection of the alternate.
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Contemporary Engineering Economics (6th Edition)
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- DPWH is considering building a new expressway going to Bicol to cut the travel time of consumers going south of Luzon. The expressway will be collecting toll from the users of the expressway. The B–C ratio method must be applied in the evaluation. Investment costs of the structure are estimated to be Php 1,000,000,000, and Php 17,000,000 per year in operating and maintenance costs are anticipated. Revenues generated from the toll are anticipated to be Php 125,000,000 in its first year of operation, with a projected annual rate of increase of 3% per year due to the anticipated annual increase in traffic. Using the problem above, assuming zero market (salvage) value for the expressway at the end of 30 years and a MARR of 10% per year, should the expressway be constructed? Solve using PW.arrow_forwardThree public investment alternatives are available: A1, A2, and A3. Their respective total benefits, costs, and first costs are given in present worth as follows: These alternatives have the same service life. Assuming that there is no donothing alternative, which project would you select, calculating on the basis of the benefit-cost ratio on incremental investment (BC(i))?arrow_forwardA sewage containment project in Louisiana is expected to require an initialinvestment of $3 million and annual maintenance expenses of $57,000. Thebenefits to the public are valued at $460,000 per year. This project can be assumed to have an infinite life. If MARR is 10% per year, determine whether the project is economically attractive using the B–C ratio measure of merit.arrow_forward
- Jill rank-ordered 10 attributes in increasing importance and identified them as A, B, …, J, with a value of 1 assigned to A, 2 to B, etc. (a) What is the sum of the scores? (b) What is the weight for attribute D? (c) Answer the two questions above if Jill decides that attribute D has the same importance as J, but all other scores stay the same.arrow_forwardbased on net worth analysis, which of the following project is acceptablearrow_forwardThe City of Manila contemplates to increase the capacity of its existing water transmission line. Two plans are under consideration. Plan A requires the construction of a parallel pipe line, the flow being maintained by gravity. The initial cost is P2,750,000 and the life is 40 years, with an annual operating cost of P50,000. Plan B requires the construction of a booster pumping station costing P1,050,000 with a life of 40 years. The pumping equipment costs an additional amount of P250,000. It has a life of 20 years and a salvage value of P25,000. The annual operating cost is P165,000. If the interest rate is 12%, which is the more economical plan and by how much lower than the other? Plan B lower than Plan A by P115,906.57 Plan B higher than Plan A by P15,906.57 Plan A higher than Plan B by P15,906.57 Plan A lower than Plan B by P115,906.57arrow_forward
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