For mutually exclusive projects are being considered for a 2 mile jog in track. The life of the track is expected to be 75 years and the sponsoring agency MARR is 13% per year annual benefits to the public. I've been estimated by an advisory committee and are shown below used to be – C method incrementally to select the best jogging track. **Project Evaluation for Jogging Track Development****Overview:**Four mutually exclusive projects are under review for a new 2-mile jogging track. The track's lifespan is projected to be 75 years with an annual interest rate of 13%. The estimated annual benefits for the public, provided by an advisory committee, are listed below. The Benefit-Cost (B-C) method is used for assessment.**Project Alternatives:**| **Alternative** | **Initial Cost** | **Annual Benefits** | **B-C Ratio** ||-----------------|------------------|---------------------|---------------|| A | $58,000 | $9,000 | 1.19 || B | $63,000 | $10,500 | 1.28 || C | $53,000 | $7,000 | 1.02 || D | $145,000 | $19,000 | 1.01 |**Incremental Benefit-Cost (B-C) Analysis:**Perform the incremental B-C Analysis as directed. Complete the table below with calculations rounded to two decimal places.| **Alternative** | **Inc. B-C Ratio** | **Is the Alternative Acceptable?** ||-----------------|--------------------|-----------------------------------|| C | 1.02 | Yes || (Selection Box) | (Input Required) | (Yes/No Dropdown) || B | | |**Explanation:**- Alternatives A, B, C, and D represent different project scenarios with varying initial costs and expected annual benefits.- The B-C Ratio indicates the relationship between benefits and costs, with a ratio above 1.0 suggesting that benefits exceed costs.- Incremental B-C Analysis compares alternatives to determine which provides the best improvement over a baseline option.- For Alternative C, the Incremental B-C Ratio is 1.02, suggesting that the alternative is acceptable as it exceeds the threshold of 1.0. Further analysis for other alternatives is required.

Answered: For mutually exclusive projects are…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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For mutually exclusive projects are being considered for a 2 mile jog in track. The life of the track is expected to be 75 years and the sponsoring agency MARR is 13% per year annual benefits to the public. I've been estimated by an advisory committee and are shown below used to be – C method incrementally to select the best jogging track.

**Project Evaluation for Jogging Track Development**

**Overview:**
Four mutually exclusive projects are under review for a new 2-mile jogging track. The track's lifespan is projected to be 75 years with an annual interest rate of 13%. The estimated annual benefits for the public, provided by an advisory committee, are listed below. The Benefit-Cost (B-C) method is used for assessment.

**Project Alternatives:**

| **Alternative** | **Initial Cost** | **Annual Benefits** | **B-C Ratio** |
|-----------------|------------------|---------------------|---------------|
| A | $58,000 | $9,000 | 1.19 |
| B | $63,000 | $10,500 | 1.28 |
| C | $53,000 | $7,000 | 1.02 |
| D | $145,000 | $19,000 | 1.01 |

**Incremental Benefit-Cost (B-C) Analysis:**
Perform the incremental B-C Analysis as directed. Complete the table below with calculations rounded to two decimal places.

| **Alternative** | **Inc. B-C Ratio** | **Is the Alternative Acceptable?** |
|-----------------|--------------------|-----------------------------------|
| C | 1.02 | Yes |
| (Selection Box) | (Input Required) | (Yes/No Dropdown) |
| B | | |

**Explanation:**

- Alternatives A, B, C, and D represent different project scenarios with varying initial costs and expected annual benefits.
- The B-C Ratio indicates the relationship between benefits and costs, with a ratio above 1.0 suggesting that benefits exceed costs.
- Incremental B-C Analysis compares alternatives to determine which provides the best improvement over a baseline option.
- For Alternative C, the Incremental B-C Ratio is 1.02, suggesting that the alternative is acceptable as it exceeds the threshold of 1.0. Further analysis for other alternatives is required.

Expert Solution

Step 1

Formula used to calculate the B-C ratio is given below:

B-C ratio = PW of benefits / PW of costs

Substitute the value of B/C ratio and PW of initial cost which is same as initial cost in B-C ratio:

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