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Road Improvement Proposal Benefit Minus Cost Calculation

Question
Engineers present three mutually exclusive road improvement proposals for consideration to the Budget Committee of City of Bombay. Costs, savings (due to reduced traffic police requirement), and estimated values of perceived benefits and disbenefits of the public for the three Proposals are given below

Proposals

1

2

3

Public benefits/ year

$650,000

$46500

$750,000

Public dis-benefit/ year

$325,000

0

0

Initial construction cost

$20,000,000

$16,000,000

$X

Maintenance cost/ year

$950,000

$680,000

$520,000

Traffic police operating cost saving/ year

$185,000

0

0

 
The planning period is 30 years. Salvage values are zero.

Determine

(a) the benefit minus cost for Proposal 1 if the interest rate 5%.
(b) the preferred (economically superior) Proposal if the interest rate is 4% and x = 28,000,000.
(c) the maximum value of x that would make Alternative 3 the preferred Alternative if the interest rate is 2%.

Summary

The question belongs to Civil Engineering and it discusses about the benefit minus cost for proposals for road improvement proposals in Bombay. Three proposals are being weighed for their maximum value, interest rate, benefits and cost, etc.

Total Word Count 350

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