Question
In: Economics
A city is considering building a bridge over a set of railroad tracks. Its estimated cost...
A city is considering building a bridge over a set of railroad tracks. Its estimated cost is $200,000. The benefits to the city’s population through reduced congestion and less wear and tear on their automobiles is estimated at 40,000/year. There will be an annual loss of $15,000 to decreased land values to businesses in the area. Yearly O&M is estimated at $5,000 per year. The bridge is expected to have a 40-year life and cost $50,000 to tear down then (negative salvage cost). The city uses the conventional B/C ratio and a 8 % MARR to evaluate its projects. Should the city construct the bridge?
Solutions
Expert Solution
B/C of project = (AW of benefits - AW of disbenefits)/(AW of initial costs + AW of O&M - AW of salvage)
B/C = (40000-15000)/(200000*(A/P,8%,40) + 5000 + 50000*(A/F,8%,40))
= (40000-15000)/(200000*0.083860 + 5000 + 50000*0.003860)
= 1.14
As B/C is more than 1, this project should be selected
Rahul Sunny answered 1 year agoRelated Solutions
A city with 4% unemployment and no inflation is considering building a new stadium for its...
A city with 4% unemployment and no inflation is considering
building a new stadium for its professional football team. The team
currently plays in an old stadium owned by the city. It would cost
city $500M (M for million) to demolish the old stadium and build a
new one at the same location, which the city owns. The new stadium
would be expected to last for 40 years and the city would finance
the costs of the project by borrowing...
A city has built a bridge over a river and it decides to charge a toll...
A city has built a bridge over a river and it decides to charge
a toll to everyone who crosses. For one year, the city charges a
variety of different tolls and records information on how many
drivers cross the bridge. The city thus gathers information about
elasticity of demand. If the city wishes to raise as much revenue
as possible from the tolls, where will the city decide to charge a
toll: in the inelastic portion of the demand...
A new bridge is to be constructed over the East River in New York City. Two...
A new bridge is to be constructed over the East River in New
York City. Two structural possibilities exist: the support could be
in the shape of a parabola or the support could be in the shape of
a semi-ellipse.
The space between the supports needs to be 1050 feet.
The height at the center of the arch needs to be 350 feet.
Determine the equation of a parabola with these characteristics.
(Hint: Place the vertex of the parabola at...
Hardhat has a contract to construct a $5,000,000 bridge at an estimated cost of $4,000,000. The...
Hardhat has a contract to construct a $5,000,000 bridge at an
estimated cost of $4,000,000. The
contract is to start in 2016 and will be completed in 2018.
Below is the data for 2016-18:
2016
2017
2018
Costs to
date
1,000,000 2,900,000
4,100,000
Est. costs to complete
3,000,000
1,200,000 -
Progress billings during
year
900,000
2,400,000
1,700,000
Cash collected during
year
750,000
2,250,000
2,000,000
Compute the percentage of...
Vania Magazines started construction of a warehouse building for its own use at an estimated cost...
Vania Magazines started construction of a warehouse building for
its own use at an estimated cost of $5,000,000 on January 1, 2019,
and completed the building on December 31, 2019. During the
construction period, Vania has the following debt obligations
outstanding.
Construction loan—12% interest, payable semiannually, issued
December 31, 2018
$2,000,000
Short-term loan—10% interest, payable monthly, and principal
payable at maturity, on May 30, 2020
1,400,000
Long-term loan—11% interest, payable on January 1 of each year;
principal payable on January...
Vania Magazines started construction of a warehouse building for its own use at an estimated cost...
Vania Magazines started construction of a warehouse building for
its own use at an estimated cost of $5,000,000 on January 1, 2019,
and completed the building on December 31, 2019. During the
construction period, Vania has the following debt obligations
outstanding.
Construction loan—12% interest, payable semiannually, issued
December 31, 2018
$2,000,000
Short-term loan—10% interest, payable monthly, and principal
payable at maturity, on May 30, 2020
1,400,000
Long-term loan—11% interest, payable on January 1 of each year;
principal payable on January...
A firm has estimated its cost of capital as 5% and is considering a project with...
A firm has estimated its cost of capital as 5% and is
considering a project with an initial investment of -$265,000. The
subsequent cash flows are $65,000; $77,000; $83,000; $91,000; and
$96,000. In the final year (year #6), the firm must pay $50,000 to
clean up the site. Calculate the project’s MIRR using the three
methods discussed in class. Please provide timelines, a description
of all of your math, and calculator inputs.
Helmet Head Construction (HHC) is building a bridge for $12 million at a total cost of...
Helmet
Head Construction (HHC) is building a bridge for $12 million at a
total cost of $10 million over the next three years. The company
uses percentage of completion method to recognize revenue. Below is
a summary of the contract:
2016
2017
2018
Costs to Date
3,600,000
7,450,000
10,450,000
Estimated Costs to Complete
6,400,000
3,000,000
-
Progress Billings During the
year
4,000,000
4,000,000
4,000,000
Cash collected during the
year
3,250,000
3,250,000
5,500,000
Record the necessary journal entries to account for...
The Abdulla Company purchased a building that cost AED 520,000. The building was estimated to have...
The Abdulla Company purchased a building that cost AED 520,000.
The building was estimated to have 20,000 salvage value and 5 years
of life.
Required:
a) (1.5 Marks) Determine depreciation for year 1 and year 2 and
record the journal entry using the following methods:
Sum of the years digits
method
Straight line
method
b) (0.5 Mark) What is the monthly depreciation for each
method?
Formula:
- Sum of the years digits = Step 1 Calculate the Sum...
A highway department is considering building a temporary bridge to cut travel time during the three...
A highway department is considering building a temporary bridge
to cut travel time during the three years it will take to build a
permanent bridge. The temporary bridge can be put up in a few weeks
at a cost of $740,000. At the end of three years, it would be
removed, and the steel would be sold for scrap. The real net costs
of this would be $81,000. Based on estimated time savings and wage
rates, fuel savings, and reductions...
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- Please, i need Unique answer, Use your own words (don't copy and paste). *Please, don't use...
- Python Create a move function that is only defined in the base class called Objects. The...
- Two cars collide at an intersection. Car A, with a mass of 1900 kg , is...
- 1) Why is it possible to change real economic factors in the short run simply by...
- Case Study 2: The Turn Around at Ford Ford has been going through difficult times and...
- At a certain temperature T1, a (1.2324x10^2) mm rod of a copper alloy containing (3.04x10^1) at%...
- choose one of the developmental theories (phychosexual-freud, psychosocial-eirkson, cognitive-piaget, or moral development-kohlberg) and exlain when and...
ADVERTISEMENT