Question

Three transportation improvement plans have been proposed for heavily populated and congested city.

Alternative I – upgrading of congested signalised intersections into full grade separated intersections at an initial construction cost of $180 million and a salvage value of $22 million. Annual operation and maintenance costs will be $230,000 per year. Major maintenance in year 20 at $5 million and in year 40 at $8 million.

Alternative II - upgrading of bus service to BRT system at an initial cost of $155 million and a salvage value of $5 million. Annual operation and maintenance costs will be $850,000 per year. Major maintenance in year 15 at $10 million, year 30 at $15 million, and year 45 at $22 million will be needed.

Alternative III - introduction of new LRT system with initial cost of $162 million and a salvage value of $20 million. Annual operation and maintenance costs will be $680,000 per year, and in year 25 a rehabilitation is required which will cost $30 million.

Draw the Cash Flow Diagram for all alternatives. Determine which alternative is preferred based on economic criteria if the analysis period is 50 years and the annual interest rate is 4%.

Evaluate the alternatives using the present worth of cost (PWC), equivalent annual cost (EUAC), and benefit-cost ratio (BCR) methods.

Answer 1

use table for factors.