Question

In: Economics

The Construction cost of the bypass is 20 million and 500,000 would be required each year...

The Construction cost of the bypass is 20 million and 500,000 would be required each year for annual maintenance. The annual benefits to the public have been estimated to be 2 million. If the study period is 50 years and the government interest rates is 8% per year, a.) Should the bypass be constructed? B.)What impact does a social interest rate of 4% per year have on the B-C ratio of the project

Solutions

Expert Solution

Please don't forget to like the solution if you found it helpful. for further query regarding this solution please comment in the section below. I will get back to you ASAP.


Related Solutions

CH: 20; Irwin, Inc., constructed a machine at a total cost of $79 million. Construction was...
CH: 20; Irwin, Inc., constructed a machine at a total cost of $79 million. Construction was completed at the end of 2012 and the machine was placed in service at the beginning of 2013. The machine was being depreciated over a 10-year life using the sum-of-the-years’-digits method. The residual value is expected to be $2 million. At the beginning of 2016, Irwin decided to change to the straight-line method. Ignoring income taxes, prepare the journal entry relating to the machine...
CH 20; Irwin, Inc., constructed a machine at a total cost of $59 million. Construction was...
CH 20; Irwin, Inc., constructed a machine at a total cost of $59 million. Construction was completed at the end of 2012 and the machine was placed in service at the beginning of 2013. The machine was being depreciated over a 10-year life using the straight-line method. The residual value is expected to be $3 million. At the beginning of 2016, Irwin decided to change to the sum-of-the-years’-digits method. Ignoring income taxes, prepare the journal entry relating to the machine...
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 manufacturer is planning to produce and sell a new product. It would cost $20 million...
A manufacturer is planning to produce and sell a new product. It would cost $20 million at Year 0 to buy the equipment necessary to manufacture the product. The project would require net working capital at the beginning of each year in an amount equal to 15% of the year's projected sales; for example, NWC0 = 15%(Sales1). The product would sell for $30 per unit, and believes that variable costs would amount to $15 per unit. After Year 1, the...
A manufacturer is planning to produce and sell a new product. It would cost $20 million...
A manufacturer is planning to produce and sell a new product. It would cost $20 million at Year 0 to buy the equipment necessary to manufacture the product. The project would require net working capital at the beginning of each year in an amount equal to 15% of the year's projected sales; for example, NWC0 = 15%(Sales1). The product would sell for $30 per unit, and believes that variable costs would amount to $15 per unit. After Year 1, the...
Diamond Construction is an owner-managed entity with contracting revenues of $20 million in 2020. As construction...
Diamond Construction is an owner-managed entity with contracting revenues of $20 million in 2020. As construction is a labour-intensive industry, one of Diamond’s largest expense accounts is labour and wages. You are a first-year auditor at Klein and Partners. You have been given the following information regarding the entity’s payroll process for hourly employees at Diamond Construction: 1. The owner-manager is the only person who can authorize the hiring of a new employee. 2. When a new employee is hired,...
XM Radio was depreciating its satellites over 20 years (total cost of $20 million), for each...
XM Radio was depreciating its satellites over 20 years (total cost of $20 million), for each of five satellites, useful life is only seven years due to the intensity of the sun rays. With reference to the scenario, answer the following questions: 1. How and when should this discovery be recorded in the financial statements of the company? Explain your response. 2. If the company issues quarterly financial statements and the discovery is made in the third quarter, should this...
XM Radio was depreciating its satellites over 20 years (total cost of $20 million), for each...
XM Radio was depreciating its satellites over 20 years (total cost of $20 million), for each of five satellites, useful life is only seven years due to the intensity of the sun rays. As the accountant what would you recommend to management and why? Be sure to address the accounting implications, explaining your rationale.
XM Radio was depreciating its satellites over 20 years (total cost of $20 million), for each...
XM Radio was depreciating its satellites over 20 years (total cost of $20 million), for each of five satellites, useful life is only seven years due to the intensity of the sun rays. With reference to the scenario, answer the following questions: What is the accounting implication in the situation and why?
A company has decided to sell $50 million in new 20-year bonds to finance new construction...
A company has decided to sell $50 million in new 20-year bonds to finance new construction projects. The company is also considering whether to issue coupon bearing bonds or zero coupon bonds both with the same face value of $1,000. The YTM on either bond issue will be 7.5%. The coupon bond would have a 7.5% coupon rate and the bond makes semiannual payments. (1) How many of the coupon bonds must the company issue to raise the $50 million?...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT