A relocation of a short stretch of rural highway feeding into Route 390 northwest of Dallas is to be made to accommodate new growth. The existing road is now unsafe, and improving it is not an alternative. Alternate new route locations are designated as East and West. The initial investment by government highway agencies will be $4,000,000 for East and $5,125,000 for West. Annual highway maintenance costs will be $120,000 for East and $90,000 for the shorter location West. Relevant annual road user costs, considering vehicle operation, time en route, fuel, safety, mileage, and so on, are estimated as $880,000 for East and only $730,000 for West. Assume a 20-year service life and i-7% Parta What is the present worth of the benefits and costs of route West over route East? PW benefits of route West over route East: $ PW costs of route West over route East: $

A relocation of a short stretch of rural highway feeding into Route 390 northwest of Dallas is to be made to accommodate new growth. The existing road is now unsafe, and improving it is not an alternative. Alternate new route locations are designated as East and West. The initial investment by government highway agencies will be $4,000,000 for East and $5,125,000 for West. Annual highway maintenance costs will be $120,000 for East and $90,000 for the shorter location West. Relevant annual road user costs, considering vehicle operation, time en route, fuel, safety, mileage, and so on, are estimated as $880,000 for East and only $730,000 for West. Assume a 20-year service life and i-7% Parta What is the present worth of the benefits and costs of route West over route East? PW benefits of route West over route East: $ PW costs of route West over route East: $

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter17: Long-term Investment Analysis

Section: Chapter Questions

Problem 10E

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A $3.5 million road widening project over a 10-mile stretch is proposed. The project will induce a 25 percent of increase in the traffic volume with an existing AADT of 20,000 in the 3-hour peak period after widening. Use 250 as the number of days per year having peak period traffic. The average speed of the existing traffic will increase from 45 mph to 55 mph. Energy use will go from an average of 28 to 23 mpg. The annual average maintenance cost is $125,000. If the value of time is $15 per hour and gasoline costs $4.5 per gallon. Use a service life of 30 years and a discount rate of 4%, calculate the project’s net present worth, benefit-to-cost ratio, and equivalent uniform annual benefits.
It is proposed to place a cable on an existing pole line along the shore of a lake to connect two points on the opposite sides. There are two alternatives: Alternative A which takes the land route and Alternative B which takes the submarine route. The data on each alternative are as follows: Alternative A Alternative B Length, km 20 12 First cost per km P45,000 P63,000 Annual maintenance per km P1,000 P3,000 Interest on investment 15% 15% Taxes 5% 5% Net salvage value per km P10,000 P22,000 Life, years 15 15 Based on the Present Worth Cost Method, a. what is the total annual costs (excluding depreciation) for Alternative A? b. what is the present worth of the costs for Alternative A? C. what is the total annual costs (excluding depreciation) for Alternative B? d. what is the present worth of the costs for Alternative B?
Problem 1 Two mutually exclusive alternatives are being considered for a site equipment at a petroleum refinery. One of these alternatives must be selected. The firm's MARR is 9% per year. The estimated cash flows for each alternative are below. If the repeatability assumption is made, which alternative is better and what is the AW of the selected alternative? Please round your answer to the nearest integer. Equipment A: • Investment Cost: $77,000 • Annual Revenue: $21,000 • Market Value: $11,000 Useful Life: 9 Years Equipment B: Investment Cost: $28,000 • Annual Revenue: $20,000 • Market Value: $8,000 • Useful Life: 6 Years
USAA is considering adding a new runway and has 3 options for the runway surface: asphalt, concrete, and a mixture of both. The benefit from all 3 alternatives is the same. Therefore, these projects are cost-based alternatives, and the cash flows are provided in the table below. Using conventional benefit/cost ratio with MARR of 9%, which alternative should be selected? First cost AW of resurfacing cost Asphalt Concrete Mixture $250,000,000 $350,000,000 $400,000,000 $30,000,000 $20,000,000 $10,000,000 Disbenefits at construction time $5,000,000 Life, years Asphalt is better Concrete is better The Mixture is better 20 $10,000,000 20 $12,000,000 20
Q4. The cash flow details of a public project is as follows = BD 250000 Initial cost /investment Annual benefits/revenues = BD 120000 Worth of annual cost Salvage value Interest rate per year 8% and useful lie 30 Years Use the three project evaluation methods( PW, FW, AW) = BD 12,000 = BD 150000
Calculate the annual net benefit from the given project summary. Capital Costs = $43,000; Revenue = $16,000/year; Operation and Maintenance Costs = $7,800/year Salvage Value = $19,000; Project Lifetime = 6 years; Effective Interest Rate = 0.09.
1. Breakeven Analysis An aerodynamic three-wheeled automobile (the Dart) runs on compressed naturalgas stored in two cylinders in the rear of the vehicle. The $13,000 Dart can cruise at speeds up to 80 miles per hour, and it can travel 100 miles per gallon of fuel. Another two-seater automobile costs $10,000 and averages 50 miles per gallon of compressed natural gas. If fuel costs $8.00 per gallon and MARR is 10% and 15%per year, over what range of annual miles driven is the Dart more economical? Assume a useful life of five years for both cars.2. Sensitivity Analysis We know the standard means of cutting the high cost of driving our automobiles—slow down your speed, no jack rabbit starts, inflate tires properly, clean air filters regularly, and so on. Another way to reduce the cost of driving is to join every bigrigger in the United States and half of Europe-go diesel. Diesels are inherently more efficient than gasoline engines because they deliver a third better fuel mileage. They…
A Clinical Laboratory plans to build a waste water management installation (IPAL) independently. For waste distribution needs, two types of specifications are considered which must be selected according to the conditions: Initial cost of the pipe Technical lifetime of the pipe Initial cost of equipment Technical lifetime of the equipment Energy costs for pumps per year Increase in energy costs for pumps every year Pipe X $ 1.200 million 60 years $ 150 million 20 years $ 30 million $ 0,6 million Pipe Y $800 million 30 years $ 200 million 20 years $ 40 million $ 0,8 million The cost of rejuvenation over 60 years is the same as the initial cost. The analysis period is 60 years, then compare Equivalent Uniform Annual Cost (X) with Equivalent Uniform Annual Cost (Y) assuming an analysis interest rate of 10% and a residual value for pipes and equipment is zero.
A new highway is to be constructed. Design A calls for a concrete pavement costing $85 per foot with a 16-year life; three paved ditches costing $4 per foot each; and four box culverts every mile, each costing $8,000 and having a 16-year life. Annual maintenance will cost $1,700 per mile; the culverts must be cleaned every four years at a cost of $400 each per mile. Design B calls for a bituminous pavement costing $40 per foot with a 8-year I four sodded ditches costing $1.45 per foot each; and two pipe culverts every mile, each costing $2,200 and having a 8-year life. The replacement culverts will cost $2,500 each. Annual maintenance will cost $2,600 per mile; the culverts must be cleaned yearly at a cost of $220 each per mile; and the annual ditch maintenance will cost $1.65 per foot per ditch. Compare the two designs on the basis of equivalent worth per mile for a 16-year period. Find the most economical design on the basis of AW and PW if the MARR is 8% per year. Click the icon to…
For each of the following problems, (a) draw the cash flow diagram (as needed); (b) present clean and clear manual solutions to the problem; (c) highlight the final answer (only the final answer as required by the problem) by enclosing it within a box. No use of excel The Ecology Group wishes to purchase a piece of equipment for recycling of various metals. Machine 1 costs $123,000, has a life of 10 years, an annual cost of $5,000, and requires one operator at a cost of $24 per hour. It can process 10 tons per hour. Machine 2 costs $70,000, has a life of 6 years, an annual cost of $2,500, and requires two operators at a cost of $24 per hour each to process 6 tons per hour. Assume interest rate at 7% per year and 2080 hours per work year. Determine the annual breakeven tonnage of scrap metal and select the better machine for a processing level of 1,500 tons per year.
Cost of the Plan projects Cost of the Land and expropriation Cost of the Roads and preparation costs Cost of the Retaining wall Cost of the Filling and ground consolidation Cost of the Treatment facilities 520,000 TL 1,680,000 TL 1,300,000 TL 15,800,000 TL 3,650,000 TL 10,900,000 TL 17,500,000 TL Cost of the 70 km 1.25 m diameter transmission line Annual repair-maintenance costs are increased by 1,250,000 TL in the first year and by 6% every year. Other expenses are increasing by 500,000 TL in the first year and by 60,000 TL every year. The price per cubic meter of water is 1,750 TL Useful life 30 years Interest rate 20% What should be the minimum amount of water to be sold per year to cover the costs of this dam?
A new highway is to be constructed. Design A calls for a concrete pavement costing $80 per foot with a 20-year life; four paved ditches costing $3 per foot each; and four box culverts every mile, each costing $10,000 and having a 20-year life. Annual maintenance will cost $1,600 per mile; the culverts must be cleaned every five years at a cost of $400 each per mile. Design B calls for a bituminous pavement costing $55 per foot with a 10-year life; four sodded ditches costing $1.40 per foot each; and four pipe culverts every mile, each costing $2,100 and having a 10-year life. The replacement culverts will cost $2,450 each. Annual maintenance will cost $2,600 per mile; the culverts must be cleaned yearly at a cost of $225 each per mile; and the annual ditch maintenance will cost $1.55 per foot per ditch. Compare the two designs on the basis of equivalent worth per mile for a 20-year period. Find the most economical design on the basis of AW and PW if the MARR is 12% per year. Click the…