Three alternative pavement structures A, B and C are considered for a rural road. They have the following cost characteristics per lane-mile: Alter. |
DOT Construction cost $ |
Annual Maintenance cost $/yr |
Annual Benefits $/yr |
Life (yrs) |
A |
$250,000 |
$5,000 |
$320,000 |
9 |
B |
$400,000 |
$6,000 |
$300,000 |
18 |
C |
$700,000 |
$10,000 |
$380,000 |
25 |
Determine the most efficient and the most profitable alternative using the Incremental Benefit/Cost method. Given:
• there is no salvage cost and
• i=4% per year compounded yearly.
Benefit Cost Ratio is measured as :
(PV of Annual Benefits - PV of Annual Costs) / (Initial Cost - PV of Salvage)
Using the above methodology the BCR for the theree alternatives is as tabulated hereunder :
Conclusion:
Alternative A is the best option as the BCR is the highest.
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