EBK BASICS OF ENGINEERING ECONOMY
2nd Edition
ISBN: 9780100255050
Author: Blank
Publisher: YUZU
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Check out a sample textbook solutionStudents have asked these similar questions
Is the Benefit-cost analysis a decision-making tool for systematically developing useful information about the desirable and undesirable effects of public projects?
Why should the government conduct a rigorously benefit-cost analysis of the project?
The following data are for a series of increasingly extensive flood-control projects.
Total Cost Per Year
Total Benefit Per Year
Plan A = Levees
$ 10,000
$ 16,000
Plan B = Small Reservoir
24,000
36,000
Plan C = Medium Reservoir
44,000
52,000
Plan D = Large Reservoir
72,000
64,000
For Plan A marginal costs and marginal benefits are
Multiple Choice
$10,000 and $16,000, respectively.
$20,000 and $32,000, respectively.
$16,000 and $26,000, respectively.
$20,000 and $16,000, respectively.
Chapter 7 Solutions
EBK BASICS OF ENGINEERING ECONOMY
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- 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.arrow_forwardCalculate the modified and conventional B-C Ratio using AW in four decimal places. Is the project acceptable?arrow_forwardWhat are the pros and cons of using an environmental impact analysis, an economic impact analysis, or cost-effectiveness analysis? Thank you!arrow_forward
- A 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_forwardIdentify the viewpoint (e.g., budget, government unit, citizen, business owner), and categorize the following cash flows as a benefit, disbenefit, or cost: (a) $600,000 annual income to area businesses from tourism created by new freshwater reservoir/ recreation area (b) $450,000 per year for repainting of bridge across the Mississippi River (c) $800,000 per year maintenance by containership port authority (d) Loss of $1.6 million in salaries for border residents because of strict enforcement of immigration laws (e) Reduction of $600,000 per year in car repairs because of improved roadways ( f ) Expenditure of $350,000 for guardrail replacement on freeway (g) $1.8 million loss of revenue by farmers because of highway right-of-way purchasesarrow_forwardWhich of the following DOES NOT agree with the definition/description of Benefit-Cost ratio?A. Benefit-Cost ratio can have a value less than 0, but the project is not economically feasible.B. A Benefit-Cost ratio less than 1 means that the benefits are inferior of the costs.C. If conventional Benefit-Cost ratio is less than 1, so does the modified Benefit-Cost ratio.D. If the annual costs = annual benefits, the conventional and modified Benefit-Cost ratios are equal to 0.arrow_forward
- Cost-effectiveness analysis (CEA) differs from benefit/cost analysis (B/C) in that: (a) CEA cannot handle multiple alternatives (b) CEA compares alternatives on the basis of a specific outcome rather than solely on monetary units (c) CEA cannot handle independent alternatives (d) CEA is more time consuming and resource intensivearrow_forwardWhich of the following DOES NOT agree with the definition/description of B/C ratio? A. B/C ratio can have a value less than 0, but the project is not economically feasible. B. A B/C ratio less than 1 means that the benefits are inferior of the costs. C. If conventional B/C ratio is less than 1, so does the modified B/C ratio. D. If the annual costs = annual benefits, the conventional and modified B/C ratios are equal to 0. E. None of thesearrow_forwardRecommend 3 specific ways that are in line with the related Sustainable Development Goal to raise awareness about the issue among university students. Please elaborate each method.arrow_forward
- From the following data for a PPP project, calculate the (a) conventional, and (b) modified benefit/ cost ratios using an interest rate of 6% per year and an infinite project period. To the People To the Government Benefits: $100,000 per year beginning now Costs: $1.8 million now and $200,000 every 3 years Disbenefits: $60,000 per year Savings: $90,000 per yeararrow_forwardWhich of the following statements is true? a. It is good to shift perspective when quantifying costs and benefits b. Your viewpoint should only be as broad as those who pay the costs. c. When the costs of a municipal project are contributed by the provincial government, you should base your analysis on the viewpoint of the municipality. d. When the costs and benefits are confined to a town, the town's viewpoint is the best viewpoint for analysis.arrow_forward7.7 Calculate the conventional B/C ratio for a county government project that is projected to have the following cash flows: costs of $2,000,000 per year; benefits of $2,740,000 per year; disbenefits of $380,000 per year. 7.8 The Hawaii Department of Transportation has planned a bypass loop that is expected to cost $9,000,000 and save motorists $820,000 per year in gasoline and other automobile-related expenses. However, local businesses will suffer sales losses estimated at $135,000 each year. (a) Calculate the conventional B/C ratio using a discount rate of 6% per year and a 20-year study period. (b) Is the proj- ect economically justified if disbenefits are con- sidered? If disbenefits are not considered? 7.9 A southwestern city that has 170,000 households is required to install treatment systems for the removal of arsenic from drinking water. The an- nual cost is projected to be $50 per household per year. Assume that one life will be saved every three years as a result of…arrow_forward
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