About 1000 vehicles per day are delayed by trains at the grade crossing. Trucks represent 35%, and 65% are other vehicles. Time for truck drivers is valued at $25 per hour and for other drivers at $8 per hour. Average time saving per vehicle will be 2 minutes if the overpass is built. No time saving occurs for the railroad. The railroad spends $80,000 annually for crossing guards. During the preceding 10-year period, the railroad has paid out $1.5 million in settling lawsuits and accident cases related to the grade crossing. The proposed project will entirely eliminate both these expenses. The state estimates that the new overpass will save it about $12,000 per year in expenses directly due to the accidents. The overpass, if built, will belong to the state. Should the overpass be built? If the overpass is built, how much should the railroad be asked to contribute to the state as its share of the $5.5 million construction cost?
About 1000 vehicles per day are delayed by trains at the grade crossing. Trucks represent 35%, and 65% are other vehicles. Time for truck drivers is valued at $25 per hour and for other drivers at $8 per hour. Average time saving per vehicle will be 2 minutes if the overpass is built. No time saving occurs for the railroad. The railroad spends $80,000 annually for crossing guards. During the preceding 10-year period, the railroad has paid out $1.5 million in settling lawsuits and accident cases related to the grade crossing. The proposed project will entirely eliminate both these expenses. The state estimates that the new overpass will save it about $12,000 per year in expenses directly due to the accidents. The overpass, if built, will belong to the state. Should the overpass be built? If the overpass is built, how much should the railroad be asked to contribute to the state as its share of the $5.5 million construction cost?
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