PROBLEM: Orange Line Metro Train The Orange Line Metro Train is an automated rapid transit system in Lahore, Punjab, Pakistan. It will be Pakistan's first metro and first of the three proposed colored rail lines for the Lahore Metro Train Project. The line will span 27.1 km with 25.4 km elevated and 1.72 km underground. Consisting of 26 stations and is expected to handle 250,000 passengers daily. It also encompasses as a part of the wider China Pakistan Economic Corridor. It is expected to be operational in early 2020. Lahore Metrobus System Inaugurated on February 11, 2014, the Lahore Metrobus System currently operates with a fleet of 66 buses. The buses run on a single 28.7 km long Ferozepur Road corridor. Following the initiation ceremony, use of the system was to be free during the first month. However, following a week of chaos and overcrowding, a fare of Rs. 20 was imposed irrespective of the QC destination. The daily ridership of the Metrobus exceeds 180,000 with the peak hourly ridership being 10,000 passengers per hour per direction (p/h/d). This figure is expected to increase by 222% to 20,000 p/h/d in 2021. To keep the cost affordable for everyone Punjab Government must pay Rs 40 as subsidy on each Rs. 20 ticket. You've been nominated as a part of an Audit Committee to analyze both Orange Line Metro Train and Lahore Metrobus System projects. To prepare for the upcoming initial meeting of the audit committee you've decided to focus on the following tasks: • Develop a cash flow diagram for both options and make use of MS Excel spreadsheet. • Use rate of returns of 6, 8 and 10% and perform sensitivity analysis. ⚫ Using Present Worth Method, Future Worth Method, Annual Worth Method and IRR Methods, check economic viability of the project. • Use both NPV and Benefit-Cost ratio methods to check the feasibility of these options and then make recommendation which option is more attractive. Use your resources to get values for Initial Investment for both projects and take project life cycle of each to be 25 years. Use suitable expected values for passenger capacity, salvage value and operations and maintenance cost in your calculations.
PROBLEM: Orange Line Metro Train The Orange Line Metro Train is an automated rapid transit system in Lahore, Punjab, Pakistan. It will be Pakistan's first metro and first of the three proposed colored rail lines for the Lahore Metro Train Project. The line will span 27.1 km with 25.4 km elevated and 1.72 km underground. Consisting of 26 stations and is expected to handle 250,000 passengers daily. It also encompasses as a part of the wider China Pakistan Economic Corridor. It is expected to be operational in early 2020. Lahore Metrobus System Inaugurated on February 11, 2014, the Lahore Metrobus System currently operates with a fleet of 66 buses. The buses run on a single 28.7 km long Ferozepur Road corridor. Following the initiation ceremony, use of the system was to be free during the first month. However, following a week of chaos and overcrowding, a fare of Rs. 20 was imposed irrespective of the QC destination. The daily ridership of the Metrobus exceeds 180,000 with the peak hourly ridership being 10,000 passengers per hour per direction (p/h/d). This figure is expected to increase by 222% to 20,000 p/h/d in 2021. To keep the cost affordable for everyone Punjab Government must pay Rs 40 as subsidy on each Rs. 20 ticket. You've been nominated as a part of an Audit Committee to analyze both Orange Line Metro Train and Lahore Metrobus System projects. To prepare for the upcoming initial meeting of the audit committee you've decided to focus on the following tasks: • Develop a cash flow diagram for both options and make use of MS Excel spreadsheet. • Use rate of returns of 6, 8 and 10% and perform sensitivity analysis. ⚫ Using Present Worth Method, Future Worth Method, Annual Worth Method and IRR Methods, check economic viability of the project. • Use both NPV and Benefit-Cost ratio methods to check the feasibility of these options and then make recommendation which option is more attractive. Use your resources to get values for Initial Investment for both projects and take project life cycle of each to be 25 years. Use suitable expected values for passenger capacity, salvage value and operations and maintenance cost in your calculations.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:PROBLEM:
Orange Line Metro Train
The Orange Line Metro Train is an automated rapid transit system in Lahore, Punjab,
Pakistan. It will be Pakistan's first metro and first of the three proposed colored rail lines for
the Lahore Metro Train Project. The line will span 27.1 km with 25.4 km elevated and 1.72
km underground. Consisting of 26 stations and is expected to handle 250,000 passengers
daily. It also encompasses as a part of the wider China Pakistan Economic Corridor. It is
expected to be operational in early 2020.
Lahore Metrobus System
Inaugurated on February 11, 2014, the Lahore Metrobus System currently operates with a
fleet of 66 buses. The buses run on a single 28.7 km long Ferozepur Road corridor. Following
the initiation ceremony, use of the system was to be free during the first month. However,
following a week of chaos and overcrowding, a fare of Rs. 20 was imposed irrespective of the
QC
Transcribed Image Text:destination. The daily ridership of the Metrobus exceeds 180,000 with the peak hourly
ridership being 10,000 passengers per hour per direction (p/h/d). This figure is expected to
increase by 222% to 20,000 p/h/d in 2021. To keep the cost affordable for everyone Punjab
Government must pay Rs 40 as subsidy on each Rs. 20 ticket.
You've been nominated as a part of an Audit Committee to analyze both Orange Line Metro
Train and Lahore Metrobus System projects. To prepare for the upcoming initial meeting of
the audit committee you've decided to focus on the following tasks:
• Develop a cash flow diagram for both options and make use of MS Excel spreadsheet.
• Use rate of returns of 6, 8 and 10% and perform sensitivity analysis.
⚫ Using Present Worth Method, Future Worth Method, Annual Worth Method and IRR
Methods, check economic viability of the project.
• Use both NPV and Benefit-Cost ratio methods to check the feasibility of these options
and then make recommendation which option is more attractive.
Use your resources to get values for Initial Investment for both projects and take project life
cycle of each to be 25 years. Use suitable expected values for passenger capacity, salvage
value and operations and maintenance cost in your calculations.
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