Question

In: Economics

The B/C ratio for a flood control project along the Swanee River was calculated to be...

The B/C ratio for a flood control project along the Swanee River was calculated to be 1.4. If the benefits were $600,000 per year and the maintenance costs were $200,000 per year, determine the initial cost of the project at an interest rate of 8% per year and a 50-year life. ( using spreadsheet)

Expert Solution

Solution:-

Benefit cost ratio is given = PW of benefits/PW of costs

PW of benefits = 600,000 (P/A,8%,50)

= 600,000*12.233

= 7,339,800

PW of Costs = A+200,000(P/A,8%,50)

=A+200,000*12.233

=A+2,446,600

As per above benefit cost ration:

1.4 =7,339,800/A+2,446,600

1.4A + 1.4*2,446,600=7,339,800

1.4A + 3,425,240 = 7,339,800

1.4A = 7,339,800-3,425,240

1.4A = 3,914,560

A= 3,914,560/1.4

A= 2,796,114.26

This gives initial cost = 2,796,114.26

Rahul Sunny answered 2 years ago

A dam is to be constructed to provide a storage reservoir for a flood control project....

A dam is to be constructed to provide a storage reservoir for a flood control project. The table below has descriptions of costs and benefits for five reservoir capacity options: Reservoir capacity (acre-feet) Initial construction costs ($ million) Average annual O&M cost ($ million) Average annual benefits ($ million) 50,000 4.5 0.032 0.317 100,000 5.0 0.079 0.761 150,000 8.0 0.127 1.078 200,000 14.0 0.143 1.269 250,000 22.0 0.190 1.332 Assume the project life = 50 years and i = 6%....

There are two ways for finding the benefit to cost ratio (B/C Ratio) B/C Ratio =...

There are two ways for finding the benefit to cost ratio (B/C Ratio) B/C Ratio = [ Annual Benefits-Annual Disbenefits] / [Annual Cost of Implementing Project] B/C Ratio = [NPV of Benefits-NPV of Disbenefits] / [NPV of Implementing Project] If the B/C Ratio is greater than one, we can infer that the project is worth undertaking. Note that there can only be one B/C ratio for a project (unlike IRR which can at times have multiple values) Problem: The City...

An area on the Colorado River is subject to periodic flood damage that occurs, on the...

An area on the Colorado River is subject to periodic flood damage that occurs, on the average, every two years (i.e., probability of flooding in any year is 0.5) and results in a $2,200,000 loss. It has been proposed that the river channel be improved by straightening and deepening it at a cost of$2,400,000, to reduce the annual probability of flooding to 0.364 during a period of 18 years before it would have to be deepened again. This procedure would...

A flood control project has construction cost during the first year (i.e. at EOY 1) of...

A flood control project has construction cost during the first year (i.e. at EOY 1) of $10 million, during the second year of $7 million, and during the third year of $4 million, It is completed at the end of the third year and thereafter incurs an annual operating cost of $170,000 per year. Benefits from the project begin during the fourth year and are valued at $1,300,000 in that year, growing at a 2% rate of increase out to...

A flood control project has a construction cost of $10 million in year 1; $6 million...

A flood control project has a construction cost of $10 million in year 1; $6 million in year 2; and $2 million in year 3, when it is completed. Beginning in year 4, annual O&M costs are $200,000/year. The interest rate is 6%. Benefits also begin accruing in year 4, valued at $1.5 million that year. Thereafter, the benefits grow at a uniform rate of $30,000/year until the end of the project life of 50 years. Make a cash flow...

A plant along the river accidentally spilled 5 × 105 Bq of 137Cs into the river....

A plant along the river accidentally spilled 5 × 105 Bq of 137Cs into the river. Average river width, depth, and velocity are 40 m, 5 m, and 3 m s?1, respectively. The longitudinal dispersion coefficient of the river is estimated to be 200 m2 s?1. A nearby city uses the river for drinking water and has its water intake station 5 km downstream from the plant. Assuming that 137Cs will be fully mixed across the river cross section by...

Perform the flood routing for a reach of river given x=0.2 and K=2 days. The inflow...

Perform the flood routing for a reach of river given x=0.2 and K=2 days. The inflow hydrograph with dt=1 day is given below. Assume equal inflow and outflow rates on March 16. Date Inflow 16-Mar 4260 17 7646 18 11167 19 16730 20 21590 21 20950 22 26570 23 46000 24 59960 25 57740 26 47890 27 34460 28 21660 29 34680 30 45180 31 49140 1-Apr 41290 2 33830 3 20510 4 14720 5 11436 6 9294 7 7831...

Description. project A. project B project cost. 1,000,000. 1,000,000 Debt/equity ratio &

Description. project A. project B project cost. 1,000,000. 1,000,000 Debt/equity ratio 30/70. 80/20 project revenue. 100,000. 100,000 annual interest rate% 5 7 Describe the significance of each of the parties to the project. ( investors, lenders etc). Describe the best to finance project based on return on equity and interpret your solution?

A steel mill located along a river. Its production pollutes the river and damages some fishermen...

A steel mill located along a river. Its production pollutes the river and damages some fishermen downstream. i. Draw a graph of the market for steel that illustrates this situation ii. Discuss two solutions with the help of your graph

Research indicates that chemical industries located along a river discharge highly toxic effluents into the river...

Research indicates that chemical industries located along a river discharge highly toxic effluents into the river in your country. This pollutes the river water and contaminates fisheries resources for which the industries do not compensate for the reduced quality of the river water and fisheries losses. If you are a high-ranking government official with an expertise in environmental economics, what different methods will you consider to apply to address the issue? Give an international example to show that the effluents...