Engineering Economy, Student Value Edition (17th Edition)
17th Edition
ISBN: 9780134838137
Author: William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher: PEARSON
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Question
Chapter 10, Problem 9P
(a):
To determine
Calculate the benefit cost ratio.
(b):
To determine
Best project.
(c):
To determine
Intangible benefit.
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Students have asked these similar questions
For a complete and correct incremental B/C
analysis method for multiple alternatives,
which of the following does the method NOT
require?
a. Čalculation of the B/C ratio of each
alternative
b. The identification of all relevant alternatives
c. Ranking the order of the projects (smallest
to largest denominator)
d. Calculation of the B/C ratio for incremental
cash flows
10. Calculate (a) the conventional B/C ratio, (b) the modified B/C ratio, and (c) the PI for the following cash flow estimates at a discount
rate of 10% per year.
a) 0.91, 0.72, 1.04
Item
PW of benefits, S
AW of disbenefits, S/year
First cost, S
M&O costs, S/year
Life of project, years
b) 1.04, 0.91, 1.21
c) 0.72, 0.91, 0.97
Cash Flow
3,800,000
45,000
1,200,000
300,000
20
d) 1.12, 1.26, 1.04
e) 1.15,0.98. 1.32
Don't use Ai.
Answer in step by step with explanation
Chapter 10 Solutions
Engineering Economy, Student Value Edition (17th Edition)
Ch. 10 - Prob. 1PCh. 10 - Prob. 2PCh. 10 - Prob. 3PCh. 10 - A retrofitted space-heating system is being...Ch. 10 - Prob. 5PCh. 10 - Prob. 6PCh. 10 - Prob. 7PCh. 10 - Prob. 8PCh. 10 - Prob. 9PCh. 10 - Prob. 10P
Ch. 10 - Prob. 11PCh. 10 - Prob. 12PCh. 10 - Prob. 13PCh. 10 - Prob. 14PCh. 10 - Prob. 15PCh. 10 - Prob. 16PCh. 10 - Four mutually exclusive projects are being...Ch. 10 - Two municipal cell tower designs are being...Ch. 10 - Prob. 19PCh. 10 - Prob. 20PCh. 10 - Prob. 21PCh. 10 - Prob. 22PCh. 10 - You have been requested to recommend one of the...Ch. 10 - Prob. 24PCh. 10 - Prob. 25PCh. 10 - Prob. 26FECh. 10 - Prob. 27FECh. 10 - Prob. 28FECh. 10 - Prob. 29FECh. 10 - Prob. 30FECh. 10 - Prob. 31FE
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- Indicate true (T) or False (F) _______Results of economic analysis is always the same regardless of which economic evaluation criterion (such as B/C ratio, IRR, etc.) is used. _______Two transportation services are substitutes if their cross elasticities are positive. _______Travel time costs are mainly dependent on the vertical and horizontal alignments. _______User benefits are achieved from an investment option if it reduces total user costs. _______Traffic mobility improvements will always cut back vehicle emissions.arrow_forwarda. Based on PW method, Design Z is more economical. b. The modified B/C ratio of Design Y is The modified B/C ration of Design Z is (Round to two decimal places) (Round to two decimal places) c. The incremental B/C ratio is (Round to two decimal places) Therefore, based on the B/C ratio method, Design Z is more economical d. The discounted payback period of Design Y is The discounted payback period of Design Z is years (Round to one decimal place) years (Round to one decimal place) Investment cost Annual revenue Annual cost Useful life Salvage value Net PW Therefore, based on the payback period method, Design y would be preferred. (e) Why could the recommendations based on the payback period method be different from the other two methods? ⒸA. because the payback period method ignores the cash flows after the payback period O B. because the payback period gives more weight to the cash flows after the payback period C Design Y Design Z $140,000 $275,000 $57,659 $96.354 $17.618 $31,687 15…arrow_forwardTwo alternatives, identified as X and Y, are evaluated using the B/C method. Alternative Y has a higher total cost than X. If the B/C ratios are 1.2 and 1.0 for alternatives X and Y, respectively, which alternative should be selected? Whyarrow_forward
- 1)what is the best project based on simple payback 2) What is the best project based on discounted payback 3)What is beta B/C ratio 4) What is gammas B/C ratioarrow_forwardA manager wants to compare between two alternatives by the B/C method; if the overall B/C ratio for both alternatives is calculated to be exactly 1.0, which alternative should the manager select? Select one: a. do nothing alternative b. Select both alternatives c. Select the alternative that has the higher cost d. Select the alternative based on the probability to occurarrow_forwardThe following estimates (in $1000 units) have been developed for a security system upgrade at Chicago’s O’Hare Airport. (a) Calculate the conventional B/C ratio at a discount rate of 10% per year. Is the project justified? (b) Determine the minimum first cost that is possible to render the project just economically unjustified. Item Cash Flow First cost, $ 13,000 AW of benefits, $ per year 3,800 FW of disbenefits, year 20, $ 6,750 M&O costs, $ per year 400 Life, years 20arrow_forward
- The benefits associated with a nuclear power plant cooling water filtration project located on the Ohio River are $15,000 per year forever, starting in year 1. The costs are $75,000 in year 0 and $75,000 at the end of year 2. At i= 10% per year, calculate the B/C ratio to determine if the project is justified economically. The B/C ratio will be The project is economically justified +arrow_forwardDon't provied handwriting solution.arrow_forwardVarrow_forward
- One of two alternatives will be selected to reduce flood damage in a rural community in central Arizona. The estimates associated with each alternative are available. Use B/C analysis at a discount rate of 7% per year over a 20-year study period to determine which alternative should be selected. For analysis purposes only, assume that the benefits of reduced flood damage are available in years 3, 13, and 18 of the study period. Retention Pond Channel Initial Cost, $ 960,000 2,900,000 Annual Maintenance , $/Year 92,000 30,000 Reduced Flood Damage, $ 200,000 550,000 The AB/C ratio is The alternative that should be selected is the retention pondarrow_forwardNot use Ai and chatgpt please.arrow_forwardIn a modified B/C ratio: Select one: a. M&O costs are put in the denominator. b. Dis-benefits are put in the denominator c. Benefits are subtracted from costs d. M&O costs are put in the numerator.arrow_forward
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