The cost of grading and spreading gravel on a curvy rural road is expected to be $300,000. The road will have to be maintained at a cost of $40,000 per year. Even though the new road is not very smooth, it allows access to an area that previously could only be reached with off-road vehicles. The improved accessibility has led to a 150% increase in the property values along the road. If the previous market value of the property was $900,000, calculate the conventional B/C ratio using an interest rate of 6% per year and a 20-year study period. What is the conventional B/C ratio?

The cost of grading and spreading gravel on a curvy rural road is expected to be $300,000. The road will have to be maintained at a cost of $40,000 per year. Even though the new road is not very smooth, it allows access to an area that previously could only be reached with off-road vehicles. The improved accessibility has led to a 150% increase in the property values along the road. If the previous market value of the property was $900,000, calculate the conventional B/C ratio using an interest rate of 6% per year and a 20-year study period. What is the conventional B/C ratio?

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

Kk.429.

The cost of grading and spreading gravel on a curvy rural road is expected to be $300,000. The road will have to
be maintained at a cost of $40,000 per year. Even though the new road is not very smooth, it allows access to
an area that previously could only be reached with off-road vehicles. The improved accessibility has led to a
150% increase in the property values along the road. If the previous market value of the property was $900,000,
calculate the conventional B/C ratio using an interest rate of 6% per year and a 20-year study period. What is the
conventional B/C ratio?

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