The option which should be selected.
Answer to Problem 32P
The option C the building with height of
Explanation of Solution
Given:
Cost of land is
Concept used:
Write the expression for present worth of benefits.
Here, the annual payment is
Write the expression for present worth of costs.
Here, the cost of building is
Write the expression for benefit cost ratio.
Calculations:
Consider option A the building with height of
Calculate the present worth of benefits.
Substitute
Calculate the present worth of costs.
Substitute
Calculate the benefit cost ratio.
Substitute
Consider option B the building with height of
Calculate the present worth of benefits.
Substitute
Calculate the present worth of costs.
Substitute
Calculate the benefit cost ratio.
Substitute
Consider option C the building with height of
Calculate the present worth of benefits.
Substitute
Calculate the present worth of costs.
Substitute
Calculate the benefit cost ratio.
Substitute
Consider incremental analysis for option B-A.
Calculate the value of A.
Calculate the present worth of benefits.
Substitute
Calculate the value of
Calculate the value of
Calculate the value of
Calculate the present worth of costs.
Substitute 
for 
for 
for 
for 
and 
for 
in Equation (II).
Calculate the benefit cost ratio.
Substitute 
for 
and 
for 
in Equation (III).
The benefit cost ratio is less than 
so option A is more preferable to B.
Consider incremental analysis for option C-A.
Calculate the present worth of benefits.
Calculate the value of A.
Substitute 
for 
for 
and 
for 
in Equation (I).
Calculate the value of 
Calculate the value of 
Calculate the value of 
Calculate the present worth of costs.
Substitute 
for 
for 
for 
for 
and 
for 
in Equation (II).
Calculate the benefit cost ratio.
Substitute 
for 
and 
for 
in Equation (III).
The benefit cost ratio is more than 
so option C is more preferable to A.
The option C the building with height of 
stories should be selected.
Conclusion:
The option C the building with height of 
stories should be selected.
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Chapter 9 Solutions
Engineering Economic Analysis
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