7.7 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 the arsenic removal system and that the EPA values a human life at $4.8 million. Use a discount rate of 8% per year and assume the life is saved at the end of each three-year period. Utilize a conventional B/C ratio to determine if the project is economically justified.
7.7 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 the arsenic removal system and that the EPA values a human life at $4.8 million. Use a discount rate of 8% per year and assume the life is saved at the end of each three-year period. Utilize a conventional B/C ratio to determine if the project is economically justified.
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