The following data is provided for a PPP project. Benefits Disbenefits To the People $150,000 per year beginning now $30,000 per year S7.4.b - Benefit/Cost Analysis of a Single Project The modified B/C ratio is Cost Savings Calculate the modified benefit/cost ratios using an interest rate of 7% per year and an infinite project period. To the Government $1.8 million now and $200,000 every 3 years $80,000 per year

The following data is provided for a PPP project. Benefits Disbenefits To the People $150,000 per year beginning now $30,000 per year S7.4.b - Benefit/Cost Analysis of a Single Project The modified B/C ratio is Cost Savings Calculate the modified benefit/cost ratios using an interest rate of 7% per year and an infinite project period. To the Government $1.8 million now and $200,000 every 3 years $80,000 per year

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter17: Long-term Investment Analysis

Section: Chapter Questions

Problem 10E

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N5 The following data is provided for a PPP project. To the People To the Government Benefits $130,000 per year beginning now Cost $1.8 million now and $200,000 every 3 years Disbenefits $45,000 per year Savings $90,000 per year Calculate the conventional benefit/cost ratios using an interest rate of 6% per year and an infinite project period.
3. Consider the two alternative investments. Year Alt. X Alt. Y -200 -200 +99 +150 +99 -85 +99 +248 Determine the B/C ratio of each alternative Determine which investment is preferable by using incremental benefit- b) cost ratio analysis. Take i= 12% 3.
In a modified B/C ratio:a. disbenefits and M&O costs are subtracted from benefitsb. disbenefits are subtracted from benefits, and M&O costs are added to costsc. disbenefits and M&O costs are added to costsd. disbenefits are added to costs, and M&O costs are subtracted from benefits
Identify the viewpoint (e.g., budget, governmentunit, citizen, business owner), and categorize thefollowing cash flows as a benefit, disbenefit, orcost:(a) $600,000 annual income to area businessesfrom tourism created by new freshwater reservoir/recreation area
In a feasible set, such as the one shown here, points INSIDE the set are said to be by points ON the frontier. Least-cost abatement curve A" 30 A' A 25 Feasible set E with zero abatement 400 600 Cost of abatement (billions € = cost per tonne abated x gigatonnes abated) Environmental quality, E (amount abated, GtCO,)
Why are benefit cost ratios inappropriate for evaluating alternative projects?
What is the benefit-cost ratio and the net benefits of a highway investment with the following characteristics: a. Construction cost: $50,000,000 b. Annual highway operating cost: $500,000 C. Service life: d. Interest rate: 6% 25 years e. Year 1 traffic: 1,000,000 vehicles per year f. Year 1 savings in travel time: 30 minutes, value of travel time savings is $15.00 per hour g. Traffic growth rate: 2% per year compounded annually
Q. 3 Large projects, such as a new tunnel under the Hudson, the Big Dig in Boston, the Denver airport, a new military jet, and a natural gas pipeline from Alaska to the Midwest, often take 5 to 15 years from concept to completion. Should benefit and cost estimates be adjusted for the greater influences and impacts of inflation, government regulatory changes, and changing local economic environments? Why or why not? How does the public budget-making process interact with the goal of accurate benefit and cost estimating for these large projects?
Using the incremental B/C analysis (AB/C). Determine the best alternative, i=10% First cost O &M Cost/year Benefit/year Salvage value Life in years A 45,000 $4,000 $15,000 $9,000 B $25,000 $1,500 $9,500 $5,000 10 с $35,000 $3,000 $14,000 $7,000 D $15,000 $2,000 $8,000 $3,000
Calculate the conventional benefit-cost ratio for the alternative: Initial Investment Revenues Costs Salvage Value Useful life MARR Select one: a.1.2960 b.1.3130 c.1.3681 d.1.4659 e.1.2114 250000 80000 22000 50000 9 0.1 17
The benefit-cost ratio of a project represents its time-valued benefit per unit investment (first cost) Select one: O True O False
The city of Jefferson is reviewing the benefits and costs of a potential universal water-metering program. Two options are considered:• Option I: Treated Surface Water Only Benefits of Deferring/DownsizingWater and Sewer Projects-$28.l millionCosts of Metering-$9.3 million Benefit-Cost Ratio-3.02• Option 2: Treated Surface Water Supplemented By 40 MUDay Groundwater Benefits of Deferring/Downsizing Water and Sewer Projects-$38.9 millionCosts of Metering (and groundwater development)-$14.7 millionBenefit-Cost Ratio-2.65 Which option should the city implement, assuming that the city has enough money to fund either project?(a) Option 1.(b) Option 2.(c) Neither.( d) Both options.