2. A proposal has been made for improving the downtown area of a small town. The plan calls for banning vehicular traffic on the main street and turning this street into a pedestrian mall with tree plantings and other beautification features. This plan will involve actual costs of $6,000,000 and, according to its proponents, the plan will produce benefits and disbenefits to the town as follows: Benefits: Increased sales tax revenue $450,000 per year Increased real estate property taxes $325,000 per year Benefits due to decreased air pollution $80,000 per year Quality of life improvements to users $70,000 per year Disbenefits: Increased maintenance $175,000 per year a. Compute the B-C ratio of this plan based on a MARR of 10% per year and an infinite life for the project. b. How does the B-C ratio change for a 20-year project life?
2. A proposal has been made for improving the downtown area of a small town. The plan calls for banning vehicular traffic on the main street and turning this street into a pedestrian mall with tree plantings and other beautification features. This plan will involve actual costs of $6,000,000 and, according to its proponents, the plan will produce benefits and disbenefits to the town as follows: Benefits: Increased sales tax revenue $450,000 per year Increased real estate property taxes $325,000 per year Benefits due to decreased air pollution $80,000 per year Quality of life improvements to users $70,000 per year Disbenefits: Increased maintenance $175,000 per year a. Compute the B-C ratio of this plan based on a MARR of 10% per year and an infinite life for the project. b. How does the B-C ratio change for a 20-year project life?
Chapter2: Loads On Structures
Section: Chapter Questions
Problem 1P
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Payback Period Method and Benefit-Cost Ratio Method
Transcribed Image Text:2. A proposal has been made for improving the downtown area of a small town. The plan calls for banning
vehicular traffic on the main street and turning this street into a pedestrian mall with tree plantings and
other beautification features. This plan will involve actual costs of $6,000,000 and, according to its
proponents, the plan will produce benefits and disbenefits to the town as follows:
Benefits:
Increased sales tax revenue $450,000 per year
Increased real estate property taxes $325,000 per year
Benefits due to decreased air pollution $80,000 per year
Quality of life improvements to users $70,000 per year
Disbenefits:
Increased maintenance $175,000 per year
a. Compute the B-C ratio of this plan based on a MARR of 10% per year and an infinite life for the project.
b. How does the B-C ratio change for a 20-year project life?
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