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Two mutually exclusive alternatives are being considered as possible ways to reduce traffic congestion. User benefits come from reduced congestion once the project is complete (i.e., annual over the life of the project). User disbenefits come from increased congestion during construction (i.e., one time). The interest rate is 8%, and the life of each alternative is 15 years. Doing nothing IS an alternative. Which alternative, if either, should be chosen? What is the incremental benefit-cost ratio for each alternative? Alternative User benefits/year User disbenefits Initial cost O&M Cost/year Alt A 2,100,000 1,200,000 6,900,000 750,000 (a) Use the conventional benefit-cost ratio (b) Use the modified benefit-cost ratio (c) Use the governmental benefit-cost ratio Alt B 2,600,000 2,100,000 9,900,000 825,000

Two mutually exclusive alternatives are being considered as possible ways to reduce traffic congestion. User benefits come from reduced congestion once the project is complete (i.e., annual over the life of the project). User disbenefits come from increased congestion during construction (i.e., one time). The interest rate is 8%, and the life of each alternative is 15 years. Doing nothing IS an alternative. Which alternative, if either, should be chosen? What is the incremental benefit-cost ratio for each alternative? Alternative User benefits/year User disbenefits Initial cost O&M Cost/year Alt A 2,100,000 1,200,000 6,900,000 750,000 (a) Use the conventional benefit-cost ratio (b) Use the modified benefit-cost ratio (c) Use the governmental benefit-cost ratio Alt B 2,600,000 2,100,000 9,900,000 825,000

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Two mutually exclusive alternatives are being considered as possible ways to reduce traffic congestion. User benefits come from reduced congestion once the project is complete (i.e., annual over the life of the project). User disbenefits come from increased congestion during construction (i.e., one time). The interest rate is 8%, and the life of each alternative is 15 years. Doing nothing IS an alternative. Which alternative, if either, should be chosen? What is the incremental benefit-cost ratio for each alternative? 4 Alternative User benefits/year User disbenefits Initial cost O&M Cost/year Alt A 2,100,000 1,200,000 6,900,000 750,000 (a) Use the conventional benefit-cost ratio (b) Use the modified benefit-cost ratio (c) Use the governmental benefit-cost ratio Alt B 2,600,000 2,100,000 9,900,000 825,000
Transcribed Image Text:Two mutually exclusive alternatives are being considered as possible ways to reduce traffic congestion. User benefits come from reduced congestion once the project is complete (i.e., annual over the life of the project). User disbenefits come from increased congestion during construction (i.e., one time). The interest rate is 8%, and the life of each alternative is 15 years. Doing nothing IS an alternative. Which alternative, if either, should be chosen? What is the incremental benefit-cost ratio for each alternative? 4 Alternative User benefits/year User disbenefits Initial cost O&M Cost/year Alt A 2,100,000 1,200,000 6,900,000 750,000 (a) Use the conventional benefit-cost ratio (b) Use the modified benefit-cost ratio (c) Use the governmental benefit-cost ratio Alt B 2,600,000 2,100,000 9,900,000 825,000
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