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
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Chapter1: Making Economics Decisions
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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.
Created by SEASOFT LTD.
Transcribed Image Text: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. Created by SEASOFT LTD.
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