Question

Conduct a Benefits-Cost Analysis on the following Highway
Project using:

Initial Costs of Tunnel $5,000,000

Annual costs for operating/maintenance 150,000

Annual savings and benefits to travelers 250,000

Residual value of benefits after horizon 350,000

Useful life of investment 30 years

Interest Rate 6%

a. B-C Ratio of Annual Worth

b. B-C Ratio of Future Worth

c. B-C Ratio of Present Worth

Answer #1

Consider a highway project with the following costs and
benefits. This representation of costs and benefits assumes the
costs occur immediately and the benefits occur at the end of year
1, end of year 2 and the end of year 3.
Year
0
1
2
3
Costs
$470,000
Benefits
$275,000
$295,000
$315,000
(a) Calculate the net present value of the project. Assume a
discount rate of 4%.
(b) Now suppose all the benefits occur at the start of each
period....

Consider the following financial data:
Project A
Project B
Initial Cost
$11531
$18817
Annual Benefit
$1490
$4888
Annual Maintenance Costs
$629
$1703
Project Life
10 years
15 years
Using a MARR of 8%, what is the benefit-cost (B/C) ratio for
project A?

Consider the following financial data:
Project A
Project B
Initial Cost
$5422
$15179
Annual Benefit
$2331
$5694
Annual Maintenance Costs
$1092
$2372
Project Life
10 years
15 years
Using a MARR of 8%, what is the incremental benefit-cost (B/C)
ratio for projects A and B?

Consider a heat pump purchase with the following details:
* Initial cost: 20,000 USD
* Annual savings: 3,000 USD for 20 years
* Annual maintenance costs: 250 USD for 20 years
* Estimated salvage value: 500 USD at the end of 20 years
(a) If the interest rate is 10%, what is the net present worth
of this heat pump?
(b) Calculate the simple payback period of the heat pump.
(c) Calculate the Benefit/Cost ratio of the heat pump
purchase....

Consider a heat pump purchase with the following
details:
* Initial cost: 15,000 USD
* Annual savings: 2,500 USD for 25
years
* Annual maintenance costs: 150 USD for 25
years
* Estimated salvage value: 300 USD at the end
of 25 years
(a) If the interest rate is 12%, what is the net
present worth of this heat pump?
(b) Calculate the simple payback period of the heat pump.
(c) Calculate the Benefit/Cost ratio of the heat pump
purchase....

Consider a heat pump purchase with the following details:
* Initial cost: 20,000 USD
* Annual savings: 3,000 USD for 20 years
* Annual maintenance costs: 250 USD for 20 years
* Estimated salvage value: 500 USD at the end of 20 years
(a) If the interest rate is 10%, what is the net present worth
of this heat pump?
(b) Calculate the simple payback period of the heat pump.
(c) Calculate the Benefit/Cost ratio of the heat pump
purchase....

A project for erection a park with the following
expected cost and benefits :
-First cost of 5250000 L.E
-Annual operating cost of 1800000 L.E for the first year
; then it increased by 300000 L.E per year up to year 5 , and after
that it remain constant at 3000000 L.E /year .
-The expected costs for improving the park will be 90000
L.E / year for the first five years .
-The expected profits will be 1650000 L.E...

Preform a benefit/cost analysis on the following
project:
Expected costs: $5,000 today, $5,000 a year from today,
and $5,000 two years from today
Expected revenue: $6,000 five years from today, $7,000
seven years from today, and $8,000 ten years from
today.
Assume a 6% discount rate
The Net Present Value (NPV) of the project
The benefit/cost ratio
Is the project worth undertaking?

A public project with social discount rate of 6% has determined
that its initial costs will be spread out over the first 2 years of
construction. They will be $10,000,000 in year 0, $15,000,000 in
year 1, and $5,000,000 in year 2. Beginning in year 3 and
continuing until year 22, the project will have an annual operating
expense of $1,000,000. In addition, the city government sponsoring
the project will receive $100,000 per year in revenue because of
the project....

A flood control project with a life of 18 years will require an
investment of $200,000 and annual maintenance costs of $15,000. The
project will provide no benefits for the first two years but will
save $80,000 per year in flood damage starting in the third year.
The appropriate MARR is 18% per year. What is the conventional B-C
ratio with present worth for the flood control project. (Enter your
answer rounded to two decimal places; i.e., x.xx)

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