$ 750,000 2,750,000 185,000 Annual benefits from new commerce 550,000 35,000 20 years Cost to remove current facilities New construction costs Annual O & M costs Annual disbenefits to sportsmen Project life Interest rate 8%
Big City Carl, a local politician, is pushing a new dock and pier system at the river to attract commerce. A committee appointed by the mayor (an opponent of Carl’s) has developed the following estimates (a) Using the conventional B/C ratio, determine whether the project should be funded. (b) After studying the numbers given by the committee, Big City Carl argued that the project life should be at least 25 years and more likely closer to 30 years. How did he arrive at this estimate, and why is he making this statement? (c) If Carl suggests that each number is 5% “better,” then what B/C ratio would he support?
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