6 A new subdivision is being built north of town. The existing road will no longer be sufficient to handle theincreased traffic. Two alternatives are being considered.The first option is to expand and upgrade the existing road to a four-lane highway.The second option is to construct a new bridge across the river to provide additional access to the subdivision.The following data outlines the costs associated with each option.MARR =12%The town uses a planning period of 30 yearsInitial CostAnnual MaintenanceTravel DistanceHighway$180,800,000$710,00020 kmBridge$400,100,000$1,200,00010 kmThe operating cost for the cars is expected to be about $1.00 per kmThe town expects approximately351,000 trips per yearWhat is the incremental annual benefit of the bridge? (HINT: the benefit is the saved time)Try AgainWhat is the incremental annual cost of the bridge?Try AgainWhich project do you recommend?

Answered: Image /qna-images/answer/72139851-3f44-4fb5-a982-cb707ad7067b.jpg

Answered: 6 A new subdivision is being built…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Problem 07.007 - Conventional B/C ratio for road improvement project The cost of grading and spreading gravel on a curvy rural road is expected to be $300,000. The road will have to be maintained at a cost of $34,000 per year. Even though the new road is not very smooth, it allows access to an area that previously could only be reached with off-road vehicles. The improved accessibility has led to a 144% increase in the property values along the road. If the previous market value of the property was $900,000, calculate the conventional B/C ratio using an interest rate of 6% per year and a 20-year study period. The conventional B/C ratio is
Locations under consideration for a border patrol station have their costs estimated by the federal government. Use the B/C ratio method at an interest rate of 8% per year to determine which location to select, if any. Location North N South S Initial Cost. $ 960,000 2,900,000 Annual Cost, $ per Year 480,000 450,000 Disbenefits, $ per Year 70,000 60,000 00 Life, Years 00 The AB/C ratio is Select location (Click to select) v
E1 A city government is considering increasing the capacity of the current waste water treatment plant. The estimated financial data for the project are as follows: Calculate the benefit-cost ratio for this capacity expansion. Calculate B, I and C’ Calculate BC Ratio
Solve the following show solutions
D4)
MAIN PROJECT lums University is considering investing in an online book ordering and information service, which will be managed by 2 employees. The following estimates relate to the costs of starting the service and the subsequent revenues from it. The initial investment needed to start the service, including the installation of additional phone lines and computer equipment, will be $1,000,000. These investments are expected to have a life of 4 years with 0 salvage value.The investments will be depreciated straight line over the four-year life.The revenues in the first year are expected to be $1500,000, growing 20% in year 2, and 10% in the two years following.The salaries and other benefits for the employees are estimated to be $150,000 in year 1, and grow 10% a year for the following three years.The cost of the books is assumed to be “0.60” of the revenues in each of the four years.The non-cash working capital, which includes the inventory of books needed for the service and the…
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K A highway bridge is being considered for replacement. The new bridge would cost $X and would last for 24 years. Annual maintenance costs for the new bridge are estimated to be $27,000. People will be charged a toll of $0.22 per car to use the new bridge. Annual car traffic is estimated at 360,000 cars. The cost of collecting the toll consists of annual salaries for six collectors at $9,000 per collector. The existing bridge can be refurbished for $1,400,000 and would need to be replaced in 24 years. There would be additional refurbishing costs of $80,000 every five years and regular annual maintenance costs of $17,000 for the existing bridge. There would be no toll to use the refurbished bridge. If MARR is 10% per year, what is the maximum acceptable cost (X) of the new bridge? Click the icon to view the interest and annuity table for discrete compounding when the MARR is 10per year. Choose the correct answer below. .... A. The maximum acceptable cost of the new bridge is $1,668,576.…
Problem 40: A local city must make an assessment about the feasibility of repairing a bridge. The estimated useful life of the bridge is 25 years. The MARR is 7%. The relevant cost estimates are found in the table below in thousands of dollars. What is the B/C ratio of making repairs most nearly? (A) 1.20 (B) 1.60 (C) 1.90 (D) 2.20 Initial Cost (K$) Annual cost (K$); Year 1-15 Annual Cost (K$); Year 15-25 Salvage Value (K$) Existing 0 11 15 6 Repair 80 4 5 21
A community is looking to build a dam over a stretch of river that is currently being used for recreation. The dam will generate electricity. The dam will have a useful life of 50 years after which its reservoir will be full of sediment and the dam will need to be removed. The following are the characteristics of the dam:Initial cost: $350,000,000Electricity produced: 200,000 MWh per year at $150/MWh Value of recreation lost: $20,000,000 per year a. If the social discount rate is a constant 2% per year, is the dam a good idea? Show your work and explain your rationale.
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