The city of Columbia is considering extending the runways of its municipal airport so that commercial jets can use the facility. The land necessary for the runway extension is currently a farmland that can be purchased for $350,000. Construction costs for the runway extension are projected to be $600,000, and the additional annual maintenance costs for the extension are estimated to be $22,500. If the runways are extended, a small terminal will be constructed at a cost of $250,000. The annual operating and maintenance costs for the terminal are estimated at $75,000. Finally, the projected increase in flights will require the addition of two air traffic controllers at an annual cost of $100,000. Annual benefits of the runway extension have been estimated as follows: $325,000 $65,000 $50,000 $50,000 Rental receipts from airlines leasing space at the facility Airport tax charged to passengers Convenience benefit for residents of Columbia Additional tourism dollars for Columbia Apply the B-C ratio method with a study period of 20 years and a MARR of 10% per year to determine whether the runways at Columbia Municipal Airport should be extended

The city of Columbia is considering extending the runways of its municipal airport so that commercial jets can use the facility. The land necessary for the runway extension is currently a farmland that can be purchased for $350,000. Construction costs for the runway extension are projected to be $600,000, and the additional annual maintenance costs for the extension are estimated to be $22,500. If the runways are extended, a small terminal will be constructed at a cost of $250,000. The annual operating and maintenance costs for the terminal are estimated at $75,000. Finally, the projected increase in flights will require the addition of two air traffic controllers at an annual cost of $100,000. Annual benefits of the runway extension have been estimated as follows: $325,000 $65,000 $50,000 $50,000 Rental receipts from airlines leasing space at the facility Airport tax charged to passengers Convenience benefit for residents of Columbia Additional tourism dollars for Columbia Apply the B-C ratio method with a study period of 20 years and a MARR of 10% per year to determine whether the runways at Columbia Municipal Airport should be extended

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

The city of Columbia is considering extending the runways of its municipal airport so that commercial
jets can use the facility. The land necessary for the runway extension is currently a farmland that can be
purchased for $350,000. Construction costs for the runway extension are projected to be $600,000, and
the additional annual maintenance costs for the extension are estimated to be $22,500. If the runways
are extended, a small terminal will be constructed at a cost of $250,000. The annual operating and
maintenance costs for the terminal are estimated at $75,000. Finally, the projected increase in flights
will require the addition of two air traffic controllers at an annual cost of $100,000. Annual benefits of the
runway extension have been estimated as follows:
$325,000
$65,000
$50,000
$50,000
Rental receipts from airlines leasing space at the facility
Airport tax charged to passengers
Convenience benefit for residents of Columbia
Additional tourism dollars for Columbia
Apply the B-C ratio method with a study period of 20 years and a MARR of 10% per year to determine
whether the runways at Columbia Municipal Airport should be extended.
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