State Transportation Department needs to decide which location should be chosen for the new bridge.
With the following information, use B/C analysis to make your recommendation, MARR=6%. Assume the
bridge will last forever.
Location A B C
Initial Cost 50,000,000 75,000,000 60,000,000
Annual Maintenance Cost 150,000 140,000 145,000
User travel Cost saving per year 7,600,000 4,100,000 5,900,000
Comparison of Location A B C
For Location A Location B Location C
Initial Cost (A) 50,000,000 75,000,000 60,000,000
Annual Maintenance Cost (B) 150,000 145,000 140,000
User Travel Saving per year (C) 7,600,000 4,100,000 5,900,000
Cash Inflow (D=C-A) 74,50,000 3,960,000 5,755,000
MARR =6% .06 .06 .06
Perpetuity Value Calculation(E= D/.06) 124,166,667 6,600,000 95,916,667
Benefit/Cost Ratio (E/A) 2.48 .88 1.60
Decision :By Using B/C Analysis, we State Transportation Department should choose Location as Ratio of Benefit/Cost is highest in Location A.
State Transportation Department needs to decide which location should be chosen for the new bridge. With...
A state highway department is trying to decide whether it should “hot-patch” a short sectionof an existing country road or resurface it. If the hot-patch method is used, approximately 300 cubic meters of material would be required at a cost of $700 per cubic meter (in place). Additionally, the shoulders will have to be improved at the same time at a cost of $24,000. These improvements will last 2 years, at which time they will have to be redone. The...