Answered: Salvage Value ($) Alternative Initial…

Salvage Value ($) Alternative Initial Annual Operations Useful Life Construction and Maintenance (years) Cost ($) 19,000 8,000 Costs ($) 2,500 4,000 2,500 1 10 3,000 5 900 20,000 10 4,600 2/3

Engineering Fundamentals: An Introduction to Engineering (MindTap Course List)

5th Edition

ISBN:9781305084766

Author:Saeed Moaveni

Publisher:Saeed Moaveni

Chapter20: Engineering Economics

Section: Chapter Questions

Problem 19P

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Concept explainers

Highway Safety

Proper highway safety refers to the methods or rules that prevent highway travelers from being killed or severely injured. Proper highway safety measures help to protect motorists, cyclists, pedestrians, passengers on public transport, and so on.

Question

Three transportation projects have been proposed to increase the safety in and around a residential neighborhood. Each project consists of upgrading existing street signing to highly retroreflective sheeting to increase visibility. The following table shows the initial construction costs, annual operating costs, useful life of the sheeting, and the salvage values for each alternative. Assume that the discount rate is 8%. Calculate the present worth for each alternative and determine the preferred project based on the economic criteria.

Discount Rate: 8%

Salvage Value
($)
Alternative Initial
Annual Operations
Useful Life
Construction
and Maintenance
(years)
Cost ($)
19,000
8,000
20,000
Costs ($)
2,500
4,000
2,500
1
10
3,000
2
900
3
10
4,600

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