The city of Oak Ridge is evaluating three mutually exclusive landscaping plans for refurbishing a publicgreenway. Benefits to the community have been estimated by a landscaping committee, and the costsof planting trees and shrubbery, as well as maintaining the greenway, are summarized below. The city'sdiscount rate is 10% per year, and the planning horizon is 10 years.Use the Incremental benefit cost (B/C) analysis to determine the best option.Note: Use the same excel sheet that you downloaded in the previous question to solve this question.Solve it in a new sheet in the same document.Annual benefits,Annual disbenefits,PlanInitial cost, $Annual cost, $/year$/year$/year50,0003,00020,00050090,0004,00030,0002,000C200,0006,00061,0002,100

The benefit-cost analysis is an important technique of capital budgeting. It is a ratio between the…

Answered: The city of Oak Ridge is evaluating…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Larry’s Lawn Service (LLS) currently offers a single lawn maintenance service that includes cutting grass, trimming shrubs, and removing leafs. LLS is considering offering an additional lawn care service which will include fertilizing and pest control. LLS hired you to perform a study to determine whether or not LLS should in fact go ahead with the new service. Your fee to LLS is $10,000 which is due whether LLS makes the investment in the new project or not. Additionally, if this new lawn care service is implemented, LLS believes that it will actually increase business for its original lawn maintenance service. You have estimated the dollar value of this benefit to the existing lawn maintenance service to be $20,000/year 34.) The $20,000 per year benefit that would accrue to the existing lawn maintenance service only if the new lawn care service is implemented is best described as a: Question 34 options: Incremental cash flow2 Externality…
The city is installing a new swimming pool in the east end recreation centre. One design being considered is a reinforced concrete pool that will cost $5000000 to install. Thereafter, the inner surface of the pool will need to be refinished and painted every 10 years at a cost of $450000 per refinishing. Assuming that the pool will have essentially an infinite life, what is the present worth of the costs associated with the pool design? The city uses a MARR of 6%. Review the following table and calculate the present worth of the project for a +5% change in refinishing costs. Round your answer to the nearest dollar. Parameter Construction Costs Refinishing Costs MARR [%] -10% -5% Base Case +5% +10% $5000000 $450000 6 Present Worth of -10% -5% 0% +5% Costs +10% Changes to Construction Costs Changes to refinishing Costs Changes to MARR ????? ?
A southwestern city that has 170,000 households is required to install treatment systems for the removal of arsenic from drinking water. The annual cost is projected to be $50 per household per year. Assume that one life will be saved every three years as a result of the arsenic removal system andthat the EPA values a human life at $4.8 million. Use a discount rate of 8% per year and assume the life is saved at the end of each three-year period.Utilize a conventional B/C ratio to determine if the project is economically justified.
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A site on a major river is being evaluated for a new lock and dam for navigation purposes. Two options are considered: (a) single 1200-foot lock or (b) single 1200-foot lock and a single 600-foot lock (two locks, side by side). Benefits and costs of the two options are indicated in the table. Interest rate to be used is 7%, and the planning period is 50 years. Initial cost Annual operating cost Annual benefit Single Lock ($ million) 60.0 1.0 12.0 Double Locks ($ million) 85.0 1.5 16.0 (a-5 pts) Show the cash flow table for both options. (You may show only for the first three years as the same numbers will repeat for the remaining planning period.) (b-10 pts) Solve by the present worth method. (c-10 pts) Solve by the annual cash flow method. (d-10 pts) Solve by the incremental benefit-cost ratio method. (e-5 pts) Check your solutions for (b), (c), and (d). Are they different? Explain.
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Since the beginning of the fiscal year 2009, Texas Department of Transportation invest one million each year to build up the transportation management database system in one of the Southern Texas city regions. TxDot is planning to transfer this database system to the city authority by the end of the fiscal year 2020. If the rate of return is 12% per year during the investment period, what is the total value of this database system when transferring?
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