Question

Given

Choosing between two proposed traffic safety project intersection of a high crash rate intersection. Two solutions are proposed.

Project A: build a 5.57 million dollars overpass to separate the two roadways. The estimated value of the crash avoided will be 513000 per year over the next 20 years.

Project B: improve the geometry and signal timing at the intersection at a cost of 418000 dollars. The estimated value of the crash avoided will be 61800 dollars per year over the next 20 years.

Required:

A- What is the percent worth benefits and costs (PWB and PWC) for each project? Show cash flow diagrams and calculations. The current interest rate is 5.4% per year.

B- Using Net Present Worth NPW which project is better?

C-Using the benefit cost ratio BCR which project is better?  

Answer 1