Contemporary Engineering Economics (6th Edition)
6th Edition
ISBN: 9780134105598
Author: Chan S. Park
Publisher: PEARSON
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Chapter 16, Problem 5P
(a):
To determine
Calculate the benefit cost ratio.
(b):
To determine
Calculate the incremental benefit cost ratio.
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A city government is considering two types of town-dump sanitary systems. Design A requires an initial outlay of $354,000 with annual operating and maintenance costs of $45,000 for the next 16 years; design B calls for an investment of $277,000 with annual operating and maintenance costs of $67,000 per
year for the next 16 years. Fee collections from the residents would again be $90,000 per year. The interest rate is 11%, and no salvage value is associated with either system.
Click the icon to view the interest factors for discrete compounding when i= 11% per year.
(a) Using the benefit-cost ratio BC(), which system should be selected?
The PIA - B is 2.11. (Round to two decimal places.)
Which system should be selected? Choose the correct answer below.
Design B
Design A
(b) If a new design (design C), which requires an initial outlay of $335,500 and annual operating and maintenance costs of $56,000, is proposed, would your answer in part (a) change?
The Pl()- cis 4.39. (Round to two…
A city government is considering two types of town-dump sanitary systems. Design A requires an initial outlay of $354,000 with annual operating and maintenance costs of $45,000 for the next 16 years; design B calls for an investment of $277,000 with annual operating and maintenance costs of $67,000 per
year for the next 16 years. Fee collections from the residents would again be $90,000 per year. The interest rate is 11%, and no salvage value is associated with either system.
Click the icon to view the interest factors for discrete compounding when /= 11% per year.
(a) Using the benefit-cost ratio BC(), which system should be selected?
The PIA - B is 2.11. (Round to two decimal places.)
Which system should be selected? Choose the correct answer below.
O
Design B
Design A
I
(b) If a new design (design C), which requires an initial outlay of $335,500 and annual operating and maintenance costs of $56,000, is proposed, would your answer in part (a) change?
The PIA -c is 4.39. (Round to two…
A city government is considering two types of town-clump sanitary systems. Design A requires an initial outlay of $400.000 with annual operating and maintenance costs of $50.000 for the next 15 years: design B calls for an investment of $300.000 with annual operating and maintenance coSIS of $80,000 per year for the next 15 years. Fee collections from the residents would be $85.000 per year. The interest rate is 8%. and no salvage value is associated with either system.(a) By the benefit-cost ratio (BC(i)), which system should be selected?(b) If a new design (design C). which requires an initial outlay of $350,000 and annual operating and maintenance costs of $65,000, is proposed, would your answer to (a) change?
Chapter 16 Solutions
Contemporary Engineering Economics (6th Edition)
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