Traffic congestion on Riverview Boulevard has reached a point where something must be done. Two suggested plans have a life of 15 years, because that is the scheduled time for completion of the new Skyway Highway. After that time traffic will fall well below current levels.Adding right-turn lanes at key intersections will cost $8.9M (million) with annual maintenance costs for signals and lane painting of $150,000. Added congestion during construction is a disbenefit of $900,000, but the reduced congestion after construction is an annual benefit of $1.6M. This benefit actually starts lower and increases over time, but for a simple initial analysis we are assuming a uniform annual benefit. Adding a second left-turn lane at a few key intersections will cost an additional $3M with an added annual maintenance cost of $75,000. This construction is more disruptive, and the total disbenefit for congestion during construction is $2.1M. Upon completion, the total benefit for reduced congestion will be $2.2M annually. Which alternative is preferred if the interest rate is 10%? Analyze using a government B/C ratio (public in numerator and government in denominator).
Traffic congestion on Riverview Boulevard has reached a point where something must be done. Two suggested plans have a life of 15 years, because that is the scheduled time for completion of the new Skyway Highway. After that time traffic will fall well below current levels.Adding right-turn lanes at key intersections will cost $8.9M (million) with annual maintenance costs for signals and lane painting of $150,000. Added congestion during construction is a disbenefit of $900,000, but the reduced congestion after construction is an annual benefit of $1.6M. This benefit actually starts lower and increases over time, but for a simple initial analysis we are assuming a uniform annual benefit. Adding a second left-turn lane at a few key intersections will cost an additional $3M with an added annual maintenance cost of $75,000. This construction is more disruptive, and the total disbenefit for congestion during construction is $2.1M. Upon completion, the total benefit for reduced congestion will be $2.2M annually. Which alternative is preferred if the interest rate is 10%? Analyze using a government B/C ratio (public in numerator and government in denominator).
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
