DPWH is considering building a new expressway going to Bicol to cut the travel time of consumers going south of Luzon. The expressway will be collecting toll from the users of the expressway. The B–C ratio method must be applied in the evaluation. Investment costs of the structure are estimated to be Php 1,000,000,000, and Php 17,000,000 per year in operating and maintenance costs are anticipated. Revenues generated from the toll are anticipated to be Php 125,000,000 in its first year of operation, with a projected annual rate of increase of 3% per year due to the anticipated annual increase in traffic. Assuming zero market (salvage) value for the expressway at the end of 30 years and a MARR of 10% per year, should the expressway be constructed? Solve using PW.
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DPWH is considering building a new expressway going to Bicol to cut the travel time of consumers going south of Luzon. The expressway will be collecting toll from the users of the expressway. The B–C ratio method must be applied in the evaluation. Investment costs of the structure are estimated to be Php 1,000,000,000, and Php 17,000,000 per year in operating and maintenance costs are anticipated. Revenues generated from the toll are anticipated to be Php 125,000,000 in its first year of operation, with a projected annual rate of increase of 3% per year due to the anticipated annual increase in traffic.
Assuming zero market (salvage) value for the expressway at the end of 30 years and a MARR of 10% per year, should the expressway be constructed? Solve using PW.
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