1. The Ministry of Works and Supply has plans to construct a network on roads and tollgates in VubwiDistrict. Its permanent Secretary presents this plan to cabinet asking for approval and argues thatalthough the project costs a lot of money at present, it will yield very significant benefits for the next 20years. He presents the following summary of costs and revenues shown in Table 1.Table 1 Summary of costs and benefits for proposed road projectYear of activity(millionActivityRoad ConstructionResurfacing of roadResurfacing of road051015Resurfacing of roadCollection of toll gate From year 3 to yearfees20CostsZMW)4005710Benefits (million ZMW)10 annually (once tollgates areoperationally)The government currently spends ZMW 3million annually on resurfacing the gravel roads andpatching up the few dilapidated bituminous roads in Vubwi district.(a) Using a discount rate of 10%, conduct a cost-benefit-analysis, and advise the cabinet accordingly.(b) Briefly explain why high discount rates are discouraged in natural resources conservation(c) Why is cost benefit analysis preferred over financial analysis in natural resources management?

Cost-Benefit Analysis (CBA) is a systematic approach used in economics to assess the potential…

The Ministry of Works and Supply has plans to construct a network on roads and tollgates in Vubwi strict. Its permanent Secretary presents this plan to cabinet asking for approval and argues that though the project costs a lot of money at present, it will yield very significant benefits for the next 20 ars. He presents the following summary of costs and revenues shown in Table 1. Table 1 Summary of costs and benefits for proposed road project Year of activity Activity Road Construction 0 Costs ZMW) 400 (million Benefits (million ZMW)

The Ministry of Works and Supply has plans to construct a network on roads and tollgates in Vubwi strict. Its permanent Secretary presents this plan to cabinet asking for approval and argues that though the project costs a lot of money at present, it will yield very significant benefits for the next 20 ars. He presents the following summary of costs and revenues shown in Table 1. Table 1 Summary of costs and benefits for proposed road project Year of activity Activity Road Construction 0 Costs ZMW) 400 (million Benefits (million ZMW)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

1. A local city council is considering a major transit expansion. The project requires purchases of $40 million in equipment now and annual expenses of $1 million each year starting in 2 years. The transit expansion is expected to reduce road congestion beginning next year and reduce respiratory illness in the region by 5% in 3 years. These benefits have been estimated monthly as 30 hours less time commuting. There are 250,000 commuters in the region and the average wage is $30 hour. Respiratory illness costs the local health system $500,000 each year. The council has asked you to complete a cost benefit analysis of the project. Present one with a time horizon of 5 years and another over the next 20 years. Current interest rates are 2% 2. Calculate the PV of $10 million received in 5 years 3. Suppose in a certain city the demand for low-cost housing can be characterized by the equation P = 200 - 2Q, where Q is housing measured in square feet. Further, suppose that supply is…
The board of your company discusses a possible future price increase of 20% for one of the products. The argument against the increase is a decrease in sales due to the increased price. With how many units (pieces), sales can fall, without changing the total gross margin, with the following data for your company.Current sales price per piece SEK 600Variable costs per piece SEK 450Current sales volume 10,000 pieces
4. A government is planning to implement a new traffic control and surveillance system. The maintenance cost of the system is $1,200,000 per year. It is believed that the new system can help 3,000 driver saving 8 hours per year. The average wage of the people in this country is $150 per hour. It is expected that the system can be used for 5 years, i.e., the first benefit and cost are B1 and C1 respectively, while the last are B5 and C5. (a) What is the value of time saved by the new system per year? (b) Suppose the market interest rate is 5%. Calculate the net present value of this system. Should the system be launched? (c) Suggest two reasons to explain why the market interest rate in part (b) may be too high to evaluate the project. Should the system be launched if the interest rate is adjusted according to your suggestions?
Use the figure to answer the following question Refer to Figure 10.2.1. Which graph ilustrates the effect of an increase in expected future income? A. (a) only OB. (b) only OC. (c) only OD. (d) only OE. Both (a) and (c) Screenshot 2024-03-21 at 10.21.50 AM Lise the figure to answer the following question Refer to Figure 16.2.1. Which graph ilustrates the effect of a decrease in goverment expenditure? OA (a) only OB. (b) only C. (e) only OD. (d) only OE. Both (a) and idi G (---) (c) Price level Price level SAS SAS SAS SAS (a) AD AD Real GDP 0 Real GDP (b) Price level SAS Price level SAS Price level ولا AD AD AD 0 Real GDP AD Real GDP (d) Figure 10.2.1 Search Price level SAS SAS, SAS SAS AD Real GDP 0 AD Real GDP (ы) Price level SAS (a) Price level SAS AD AD AD AD Real GDP 0 Real GDP (c) (d) Figure 10.2.1
2. Mang Oleh Kembang in Lembang has 10 major fields that are used to grow Mango. The productivity of each field is expressed as follows: Annual Yield, Hundreds of Kilograms Field 1 2000 Field 2 1800 Field 3 1750 Field 4 1625 Field 5 1500 Field 6 1450 Field 7 1375 Field 8 1225 Field 9 8500 Field 7250 10 Assume that each field is the same size and that the variable costs of farming are $74,600 per year per field. The variable costs cover labour and machinery time, which is rented. Tamima farm must decide each year how many fields to plant. a. In 2017, corn farmers received $5.15 per 100 KG. How many fields did Tamima plant? Explain. b. By 2020, the price of corn had fallen to $4.23 per 100 KG. How will this price decrease change Tamima's decision? How will it affect his demand for labour?
7. The table below provides information about the growth of a pine forest in Georgia. The price of the harvested timber is $40 per cubic foot and the forest only provides timber benefits. Age (years) Current annual increment Volume (cubic feet) Mean annual increment 10 814 1,992 81.4 81.4 20 99.6 117.8 144.6 3,438 5,056 6,750 30 114.6 40 126.4 161.8 50 135 140.4 169.4 167.4 60 70 8,424 9,982 11.328 12,366 142.6 141.6 155.8 134.6 80 90 100 137.4 103.8 13,000 130 119.4 105.6 63.4 110 13,134 13.4 120 12.672 -46.2 (A) When should the forest be harvested if the objective is to maximize the average annual timber volume growth (l,e., biological rotation)? (B) What are two problems with using this rotation age to manage forest lands? CI Will this rotation age be longer or shorter than the rotation age that makimizes the present value of the total timber income over multiple rotations? Why?
2. A municipal solid-waste site for a city must be located at Site A or SiteB. After sorting, some of the solid wastes will be transported to an electric power plant where it will be used as fuel. Data for the hauling of solid wastes from each site to the power plant are shown in Table below. Average hauling distance Yearly rental fee for solid - SITE A 4 kilometers P5,000 SITE B 3 kilometers P100,000 waste site Hauling Cost P1.50 per m - km P1.50 per m - I n° - km If the power plant will pay P8.00 per m of sorted solid waste delivered to the plant, where should the solid-waste site be located? Use the city's viewpoint and assume that 200,000 m of wastes will be hauled to the plant for one year only. What site must be selected? Show your computation and defend your answer. (20 points)
Project Repair highways Build new highways Build a new bridge Build a new tunnel Expand existing airport Total Cost (in millions) $100 $100 $100 $100 $100 Total Benefit (in millions) $80 $90 $140 $115 $130 This table shows the costs and benefits for some new projects that a local government is considering. Based on these costs and benefits, which project should the government select? O Build new highways O Expand existing airport O Build a new bridge O Build a new tunnel O Repair highways
44 69 108% INFRASTRUCTURE AT BREAKING POINT WATER 2012 Present demand POWER 1,020 MGD Present supply 6,400 2,000mw Delhi's own power generation (installed capacity) MW 845 MGD Additional unutilized treatment capacity Expected peak 25% power demand in 2013 Average increase in power consumption 180MGD every year 2021 PARKING of the city's urbanized area required for 11% 1450 MGD 1925- 1300 MGD car parking Delhi has registered cars per 1,000 people 130忡忡 Expected Expected demand MODmon ealons er Ny 区中
Solve for ERS 25% Mimimum Attractive Rate of Return 13% Interest Rate External $7.250.00 Excess Expenditure EOY 1 $13,500.00 Investment Capital $4,850.00 Annual Excess of receipts over expenses from EOY 2 to 6
For this question, use the following information: A В D E Initi al Investment -3,300 -6,500 -5,000 -8,000 -4,000 Annual Benefit 700 1,200 900 1,400 850 Salvage Value 100 400 300 1,000 200 Useful life 10 10 10 10 10 IRR 16.85% 13.49% 12.86% 12.67% 17.01% E-A C-A В-А D-A D-B Delta IRR 17.74% 4.63% 9.92% 9.76% 9.47% С-Е В-Е D-E В-С D-C Delta IRR -7.43% 7.50% 8.31% 15.52% 12.38% Which alternate should be selected if MARR is 9% (mutually exclusive)?
Four methods of completing a tax return and the time taken by each method are: A PC, one hour B Pocket calculator, 12 hours C Pocket calculator and paper and penol, 12 hours D Pencil and paper, 16 hours The PC and its software cost $1,000, the pocket calculator costs $10, and the penol and paper cost $1 Which of the methods is technologically efficient? OA. Only metod D is technologically efficient. OB. Methods A, B, and D are technologically efficient. OC. Only method A is technologically efficient. Oo. Methods A and C are technologically efficient