ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
expand_more
expand_more
format_list_bulleted
Question
Chapter 16, Problem 30P
To determine
Recommend the best alternative.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
From the PW, AW, and FW values shown, the conventional B/C ratio is closest to:
(а) 1.27
(b) 1. 33
(c) 1.54
PW, $
AW, $/Year
FW, $
First cost
100,000
16,275
259,370
M&O cost
68,798
11,197
178,441
(d) 2. 76
Benefits
245,784
40,000
637,496
(e) Any of the above
Disbenefits
30,723
5,000
79,687
a
b
d
e
For a fuel cell project that has a
20-year life the following estimates,
determine the Benefit over Cost
ratio and modified B/C ratio. Use
an interest rate of 8% per year:
Benefits $90,000 each 5 year
First cost $750,000
disbenefits $10,000 each 4 year
Annual cost $50,000 per year
Annual savings $30,000 per year
B/C=
Pw of Benefits
Pw of Cost
Modified B/C =
Aw of Benefits
Aw of Cost
Assignment
Fw of Benefits
Fw of Cost
Benefits-Disbenefits-0 & M costs
Initial investment
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
Chapter 16 Solutions
ENGR.ECONOMIC ANALYSIS
Ch. 16 - Prob. 1QTCCh. 16 - Prob. 2QTCCh. 16 - Prob. 3QTCCh. 16 - Prob. 4QTCCh. 16 - Prob. 1PCh. 16 - Prob. 2PCh. 16 - Prob. 3PCh. 16 - Prob. 4PCh. 16 - Prob. 5PCh. 16 - Prob. 6P
Ch. 16 - Prob. 7PCh. 16 - Prob. 8PCh. 16 - Prob. 9PCh. 16 - Prob. 10PCh. 16 - Prob. 11PCh. 16 - Prob. 12PCh. 16 - Prob. 13PCh. 16 - Prob. 14PCh. 16 - Prob. 15PCh. 16 - Prob. 16PCh. 16 - Prob. 17PCh. 16 - Prob. 18PCh. 16 - Prob. 19PCh. 16 - Prob. 20PCh. 16 - Prob. 21PCh. 16 - Prob. 23PCh. 16 - Prob. 24PCh. 16 - Prob. 25PCh. 16 - Prob. 26PCh. 16 - Prob. 27PCh. 16 - Prob. 28PCh. 16 - Prob. 29PCh. 16 - Prob. 30PCh. 16 - Prob. 31PCh. 16 - Prob. 32PCh. 16 - Prob. 33PCh. 16 - Prob. 34PCh. 16 - Prob. 35PCh. 16 - Prob. 36PCh. 16 - Prob. 37PCh. 16 - Prob. 38PCh. 16 - Prob. 39PCh. 16 - Prob. 40PCh. 16 - Prob. 41PCh. 16 - Prob. 42PCh. 16 - Prob. 43PCh. 16 - Prob. 44PCh. 16 - Prob. 45PCh. 16 - Prob. 46PCh. 16 - Prob. 47PCh. 16 - Prob. 48PCh. 16 - Prob. 49P
Knowledge Booster
Similar questions
- When a B/C analysis is conducted, the benefits and costs: (a) Must be expressed in terms of their present worth values (b) Must be expressed in terms of their annual worth values (c) Must be expressed in terms of their future worth values (d) Can be expressed in terms of PW, AW, or FWarrow_forwardThe following estimates (in $1000 units) have been developed for a new cybersecurity system at Chicago's O'Hare Airport. Calculate the conventional B/C ratio at a discount rate of 10% per year. First cost, $ AW of benefits, $ per year FW (in year 20) of disbenefits, $ M&O costs, $ per year Expected life, years O 1.21 <1.15 1.52 O 1.91 DOCUMENT.pdf 13,000 3,800 6,750 400 20arrow_forwardA proposal to reduce traffic congestion on Jounieh Highway has a B/C ratio of 1.4. The annual worth of benefits minus disbenefits is $560,000. What is the first cost of the project if the interest rate is 5% per year and the project is expected to be perpetual?* 4,000,000 4,588,208 8,000,000 6,666,667arrow_forward
- From the following data for a PPP project, calculate the (a) conventional, and (b) modified benefit/ cost ratios using an interest rate of 6% per year and an infinite project period. To the People To the Government Benefits: $100,000 per year beginning now Costs: $1.8 million now and $200,000 every 3 years Disbenefits: $60,000 per year Savings: $90,000 per yeararrow_forwardDavao International Airport has crafted estimates for the upgradıng of security systems. Will the upgrade be accepted? Determine the B/C ratio at an interest rate of 10% per year using the conventional Annual Worth method of the following: a. Benefits are reduced by disbenefits b. Costs are increased by disbenefits Cashflow Amount First costs $13,000,000 $3,800,000 $6,750,000 $400,000 Annual worth of benefits Future Worth of disbenefits Annual operating and Maintenance costs Life 20 yearsarrow_forwardPlease solve, show and explain steps. This is Engineering Economics.arrow_forward
- A community public works project will cost $92,000 and will benefit five different individuals. Individual Individual Benefit ($) Individual Cost ($) 1 4,500 6,000 2 18,500 15,000 3 19,000 17,000 4 30,000 24,000 5 29,000 30,000 Does this project meet the Pareto efficiency improvement criterion? If possible, revise the cost shares to allow the project to meet the Pareto criterion and to pass a referendum. please use excel with formulasarrow_forwardThe modified B/C ratio for a city-owned hospital heliport project is 1.7. The initial cost is $0.6 million, annual benefits are $150,000, and the estimated life is 29 years. What is the amount of the annual M&O costs used in the calculation at a discount rate of 6% per year? The annual M&O costs is $ .arrow_forwardThe sheriff of Los Lunas county along the Arizona- Mexico border asked the county to build a new minimum security detention facility for personscaught while attempting to enter the United States illegally. The construction cost will be $22 million, with annual operating costs of $2.1 million. The new facility will create jobs that produce benefits for many local businesses including realtors, restaurants, etc. The benefits are estimated to be $5 million in years 1 and 2, $2.8 million in year 3, and $1.12 million per year beginning in year 4 and continuing through the 30-year life of the facility. At a discount rate of 8% per year, does the conventional B/C ratio indicate that the project is economically justified?arrow_forward
- Consider the following assumptions, field size 640 acres, non-cropped area 5 acres, 2600' total length center pivot cost of 30,000 with a life expectancy of 15 years, corn selling price of $3.75 per bushel, expected grain yield of 160 bushels per acre. If SDI irrigation costs $675 per acre installed with a life expectancy of 25 years, expected yield of 160 bushels per acre, you would be money ahead to install SDI. True Falsearrow_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_forwardConsider a piece of equipment that has the following cost and benefit estimates, and the interest rate is 15% per year: Initial investment: $200,000 Equipment life: 10 years Salvage value: $10,000 Annual receipts: $100,000 Annual expenses: $50,000 What is the modified B/C ratio of this equipment? Click the icon to view the interest and annuity table for discrete compounding when = 15% per year. Thr modified cost-benefit ratio is (Round to two decimal places.) According to the B-C ratio method, the project is More Info Single Payment Compound Amount Present Factor Worth Factor To Find F To Find P Discrete Compounding; /= 15% Compound Amount Factor To Find F Uniform Series Sinking Present Capital Recovery Worth Factor To Find P Fund Factor To Find A Factor To Find A Given P Given F Given A Given A Given F Given P N FIP P/F F/A PIA A/F A/P 1 1.1500 0.8696 1.0000 0.8696 1.0000 1.1500 2 1.3225 0.7561 2.1500 1.6257 0.4651 0.6151 3 1.5209 0.6575 3.4725 2.2832 0.2880 0.4380 4 1.7490 0.5718…arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Principles of Economics (12th Edition)EconomicsISBN:9780134078779Author:Karl E. Case, Ray C. Fair, Sharon E. OsterPublisher:PEARSON
Engineering Economy (17th Edition)EconomicsISBN:9780134870069Author:William G. Sullivan, Elin M. Wicks, C. Patrick KoellingPublisher:PEARSON
Principles of Economics (MindTap Course List)EconomicsISBN:9781305585126Author:N. Gregory MankiwPublisher:Cengage Learning
Managerial Economics: A Problem Solving ApproachEconomicsISBN:9781337106665Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike ShorPublisher:Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-...EconomicsISBN:9781259290619Author:Michael Baye, Jeff PrincePublisher:McGraw-Hill Education
Principles of Economics (12th Edition)
Economics
ISBN:9780134078779
Author:Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:9780134870069
Author:William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:PEARSON
Principles of Economics (MindTap Course List)
Economics
ISBN:9781305585126
Author:N. Gregory Mankiw
Publisher:Cengage Learning
Managerial Economics: A Problem Solving Approach
Economics
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-...
Economics
ISBN:9781259290619
Author:Michael Baye, Jeff Prince
Publisher:McGraw-Hill Education