A relocation of a short stretch of rural highway feeding into Route 390 northwest of Dallas is to be made to accommodate new growth. The existing road is now unsafe, and improving it is not an alternative. Alternate new route locations are designated as East and West. The initial investment by government highway agencies will be $4,000,000 for East and $5,125,000 for West. Annual highway maintenance costs will be $120,000 for East and $90,000 for the shorter location West. Relevant annual road user costs, considering vehicle operation, time en route, fuel, safety, mileage, and so on, are estimated as $880,000 for East and only $730,000 for West. Assume a 20-year service life and i-7% Parta What is the present worth of the benefits and costs of route West over route East? PW benefits of route West over route East: $ PW costs of route West over route East: $

A relocation of a short stretch of rural highway feeding into Route 390 northwest of Dallas is to be made to accommodate new growth. The existing road is now unsafe, and improving it is not an alternative. Alternate new route locations are designated as East and West. The initial investment by government highway agencies will be $4,000,000 for East and $5,125,000 for West. Annual highway maintenance costs will be $120,000 for East and $90,000 for the shorter location West. Relevant annual road user costs, considering vehicle operation, time en route, fuel, safety, mileage, and so on, are estimated as $880,000 for East and only $730,000 for West. Assume a 20-year service life and i-7% Parta What is the present worth of the benefits and costs of route West over route East? PW benefits of route West over route East: $ PW costs of route West over route East: $

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Related questions

Q: f the MPC is 0.80 then the MPS is

A: The ‘marginal propensity to consume(MPC)’ is referred to as the proportion of an aggregate…

Q: A telecommunications firm is considering a product expansion of a popular cell phone. Two…

A: Annual Worth Analysis is a method that converts all cash inflows and outflows into equivalent,…

Q: The annual benefits of $4,000 every year for three years may be obtained for an investment on a…

A: NPW ($) = - Initial cost + Present value of $4,000 per year for 3 years + Present value of $5,000 at…

Q: help please answer in text form with proper workings and explanation for each and every part and…

A: The project should be executed for options a, b, and d, but not for option c

Q: A city is evaluating the installation of a garbage incinerator on the outskirts of town. The cost of…

A: Given information: The cost of unit = $3 million Operating expenses = $30000 Remediation expenses =…

Q: Using exactly the same information from Problem No. 1 above, calculate the Annual Worth of Project Y…

A: Present value refers to the value of a certain project or sum of money that is receivable in the…

Q: Required information In order to provide drinking water as part of its 50-year plan, a west coast…

A: An economical pipeline has the lowest overall cost over its useful life, taking into consideration…

Q: You have access to two N-fertilizer sources. Which is the more economical option? urea (46-0-0):…

A: To determine the most economical option ascertain the cost per pound of nitrogen from both sources.…

Q: A secondary road in a developing country, 20 km long is to be improved by surface treating the…

A: In economics and finance, the benefit-cost ratio (BCR) or benefit-to-cost ratio is an indicator used…

Q: Civil engineering consulting firms that provide services to outlying communities are vulnerable to a…

A: Introduction: An interest rate is the amount of interest due every period as a percentage of the…

Q: A new road is being proposed to create a shortcut from a major residential area to an industrial…

A: Net present worth (NPW) is a financial analysis technique that calculates the present value of the…

Q: hated capital investment amounts and annual expenses are as follows: Design End-of-Year ER1 ER2…

A: the minimum acceptable rate of return, often abbreviated MARR, or hurdle rate is the minimum rate…

Q: USAA is considering adding a new runway and has 3 options for the runway surface: asphalt, concrete,…

Q: A $3.5 million road widening project over a 10-mile stretch is proposed. The project will induce a…

A: In a typical capital budgeting project, there are drivers of benefits as well costs. We have to find…

Q: 2. Three mutually exclusive earth-moving pieces of equipment are being considered for several large…

A: The objective of the question is to determine which of the three earth-moving equipment alternatives…

Q: The four alternatives described below are being evaluated Alternative A ABCD Investment IRR $200,000…

A: Detailed explanation:Step 1: List the Alternatives and their IRRsAlternative A: IRR=15%Alternative…

Q: The B/C method, and (b) The modified B/C method to determine which location, if either, should be…

Q: An estimated 6 billion gallons of clean drinking water disappear each day across the United States…

A: a. Table 1 shows the project cash flow:

Q: Figures 1 and 2 below show the existing cross sections at station 0+00 and 1+00. Figure 3 shows the…

A: Hey, Thank you for the question. According to our policy we can only answer up to 3 subparts per…

Q: A company is considering supplying employees with company cars. Employee travel is expected to be a…

A: Given:Purchase Cost: $22,000Salvage Value: $5,000Insurance Cost: $1,000/yearOperating and…

Q: Capitalized cost: Select one: a. is the future sum needed to provide a perpetual series of cash…

A: capitalized cost is a special kind of present worth analysis that chooses between alternatives with…

Q: 11) What is the present worth of an independent project that requires initial investment of $50 000…

A: present value, also known as present discounted value, is the value of an expected income stream…

Q: he state of Glottamora has $300 million remaining in its budget for the current year. One…

A: The distinction between gift|this} price of money inflows and withdrawals over a amount of your time…

Question

A relocation of a short stretch of rural highway feeding into Route 390 northwest of Dallas is to be made to accommodate new
growth. The existing road is now unsafe, and improving it is not an alternative. Alternate new route locations are designated as East
and West. The initial investment by government highway agencies will be $4,000,000 for East and $5,125,000 for West. Annual
highway maintenance costs will be $120,000 for East and $90,000 for the shorter location West. Relevant annual road user costs,
considering vehicle operation, time en route, fuel, safety, mileage, and so on, are estimated as $880,000 for East and only $730,000 for
West. Assume a 20-year service life and i-7%
Part a
What is the present worth of the benefits and costs of route West over route East?
PW benefits of route West over route East: $
PW costs of route West over route East: $

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1: Define present worth

VIEW

Step 2: Calculate Present worth of benefits

VIEW

Step 3: Calculate Present worth of costs

VIEW

Solution

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 4 steps with 8 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions

In a city by a river, flood damage to businesses and homes averages $5,000,000 per year. A proposed levee system would prevent all flood damage, at a cost of $50,000,000 to construct and $3,000,000 per year for maintenance and interest. The city proposes to finance the construction by selling bonds; these bonds would have a 20-year term and pay 6% interest on par value. The bonds will be renewed at maturity for the same term and at the same interest rate. The benefit-cost ratio for the levee system is A. less than 0.5 B. greater than 0.5 but less than 1.0 C. greater than 1.0 but less than 1.5 D. greater than 1.5
The Logan Well Services Group is considering two sites for storage and recovery of reclaimed water. The mountain site (MS) will use injection wells that cost $4.2 million to develop and $280,000 per year for M&O. This site will be able to accommodate 150 million gallons per year. The valley site (VS) will involve recharge basins that cost $11 million to construct and $400,000 per year to operate and maintain. At this site, 720 million gallons can be injected each year. If the value of the injected water is $3.00 per thousand gallons, which alternative, if either, should be selected according to the B/C ratio method? Use an interest rate of 8% per year and a 20-year study period. The B/C ratio is . Select alternative (Click to select) neither of the alternatives mountain site valley site .
Need some assistance with this
The consultancy Imagination Inc. is working with its manufacturing client Parts-R-Us to improve their on-time performance. The firm can earn a bonus of up to $1,000,000 based on how much the on-time performance actually improves. It's current (baseline) on-time performance is 90%. The company typically completes approximately 1,000 orders per month, with approximately 100 orders delayed. The bonus payment is prorated according to the following criteria: · The on-time performance improvement is calculated based on a reduction in late events or an improvement in on-time performance. · No bonus is earned for the first 25% reduction in late events, say from 100 to 75. Maximum bonus is earned once Parts-R-Us achieves 95% on-time performance. Please answer the following: Write down a formula to determine the total bonus amount to be received Using your formula, show how much bonus would be paid if Parts-R-Us achieves 94% on-time performance.
Hint: You need to do the following three things; 1) PWC Old & PWC New 2) Incremental NPV 3) Incremental ROR
With interest at 10%, what is the benefit-cost ratio for this government project? $208,355 Initial Cost Additional costs at the end of year 1 and year 2 Benefits at end of year 1 and year 2 Annual benefits at end of year 3 through year 10 $23,720/year $0/year $91,825/year Enter your answer as follow: 12.34
USAA is considering adding a new runway and has 3 options for the runway surface: asphalt, concrete, and a mixture of both. The benefit from all 3 alternatives is the same. Therefore, these projects are cost-based alternatives, and the cash flows are provided in the table below. Using conventional benefit/cost ratio with MARR of 9%, which alternative should be selected? First cost AW of resurfacing cost Asphalt Concrete Mixture $250,000,000 $350,000,000 $400,000,000 $30,000,000 $20,000,000 $10,000,000 Disbenefits at construction time $5,000,000 Life, years Asphalt is better Concrete is better The Mixture is better 20 $10,000,000 20 $12,000,000 20
Two investment projects are being evaluated based on their payback periods. The first alternative requires an initial investment of $760,000, has gross revenues of $118,000, annual O &M costs of $23,000 and a service life of 20 years. What is the project's discounted payback period if the MARR is 8% per year? OA. 8.3 years OB. 13.3 years O C. 16.7 years OD. 9.4 years If the second alternative has a payback period of 8 years, which alternative should be preferred based on the payback period? OA. The first alternative OB. The second alternative