Engineering Econ: A toll bridge across the Ohio River is being considered as a replacement for the current John F. Kennedy I-65 bridge linking Indiana to Kentucky at Louisville. Because this bridge, if approved, would become a part of the United States interstate highway system, benefit-cost analysis must be applied in the evaluation. Initial investment costs of the structure are estimated to be $18,000,000, and $475,000 per year in operating and maintenance costs are anticipated over its 30-year projected lifetime. In addition, the bridge must be completely resurfaced every fifth year at a cost of $1,500,000 per occurrence; in other words, consider the first resurfacing to occur at t=5, the second at t=10, and so forth, but with no resurfacing cost in year 30 (because the bridge will be replaced at that time). Revenues generated from the tolls are anticipated to be $3,500,000 in its first year of operation (i.e., at t=1), with a projected annual rate of increase of 2% per year due to an anticipated annual increase in traffic across the bridge. Assuming zero salvage value for the bridge at the end of 30 years and a MARR of 10% per year, what is the benefit-cost ratio of the project? Report your answer to the nearest hundredth (e.g., two decimal points).
Engineering Econ:
A toll bridge across the Ohio River is being considered as a replacement for the current John F. Kennedy I-65 bridge linking Indiana to Kentucky at Louisville. Because this bridge, if approved, would become a part of the United States interstate highway system, benefit-cost analysis must be applied in the evaluation. Initial investment costs of the structure are estimated to be $18,000,000, and $475,000 per year in operating and maintenance costs are anticipated over its 30-year projected lifetime. In addition, the bridge must be completely resurfaced every fifth year at a cost of $1,500,000 per occurrence; in other words, consider the first resurfacing to occur at t=5, the second at t=10, and so forth, but with no resurfacing cost in year 30 (because the bridge will be replaced at that time). Revenues generated from the tolls are anticipated to be $3,500,000 in its first year of operation (i.e., at t=1), with a projected annual rate of increase of 2% per year due to an anticipated annual increase in traffic across the bridge. Assuming zero salvage value for the bridge at the end of 30 years and a MARR of 10% per year, what is the benefit-cost ratio of the project? Report your answer to the nearest hundredth (e.g., two decimal points).
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