Case Study 16 A project has the following cost and benefit data. Initial Cost = $15M Annual O&M Cost = $500K Annual Benefit = $4M The life has the following Probability distribution. \[\begin{array} { l l } \text { Life } & \text { Probability } \\ 7 & 0.20 \\ 8 & 0.50 \\ 9 & 0.30 \end{array}\] MARR = 8% -Compute the conventional B/C ratio for a life of 8 years.

A) 1.290 B) 1.183 C) 1.286 D) 1.379 A) 1.290 B) 1.183 C) 1.286 D) 1.379 C

A small town is considering two potential alternatives for a garbage collection system. The following cost data has been compiled. If the interest rate is 6%, Compute the ?B /?C ratio. \[\begin{array} { | l | c | c | } \hline \text { Year } & \text { System A } & \text { System B } \\ \hline 0 & - \$ 250,000 & - \$ 375,000 \\ \hline 1 - 30 & 20,000 & 32,000 \\ \hline 30 & 40,000 & 50,000 \\ \hline \end{array}\]

A) 0.96 B) 1.09 C) 2.27 D) 1.34 A) 0.96 B) 1.09 C) 2.27 D) 1.34 D

Case Study 16 A project has the following cost and benefit data. Initial Cost = $15M Annual O&M Cost = $500K Annual Benefit = $4M The life has the following Probability distribution. \[\begin{array} { l l } \text { Life } & \text { Probability } \\ 7 & 0.20 \\ 8 & 0.50 \\ 9 & 0.30 \end{array}\] MARR = 8% -Compute the conventional B/C ratio for a life of 7 years.

A) 1.290 B) 1.183 C) 1.286 D) 1.379 A) 1.290 B) 1.183 C) 1.286 D) 1.379

Case Study 16 A project has the following cost and benefit data. Initial Cost = $15M Annual O&M Cost = $500K Annual Benefit = $4M The life has the following Probability distribution. \[\begin{array} { l l } \text { Life } & \text { Probability } \\ 7 & 0.20 \\ 8 & 0.50 \\ 9 & 0.30 \end{array}\] MARR = 8% -Compute the conventional B/C ratio for a life of 9 years.

A) 1.290 B) 1.183 C) 1.286 D) 1.379 A) 1.290 B) 1.183 C) 1.286 D) 1.379

Case Study 16 A project has the following cost and benefit data. Initial Cost = $15M Annual O&M Cost = $500K Annual Benefit = $4M The life has the following Probability distribution. \[\begin{array} { l l } \text { Life } & \text { Probability } \\ 7 & 0.20 \\ 8 & 0.50 \\ 9 & 0.30 \end{array}\] MARR = 8% -Compute the conventional B/C ratio using the expected EUAC.

A) 1.290 B) 1.183 C) 1.286 D) 1.379 A) 1.290 B) 1.183 C) 1.286 D) 1.379

Exam 16: Economic Analysis in the Public Sector

Case Study 16 A project has the following cost and benefit data. Initial Cost = $15M Annual O&M Cost = $500K Annual Benefit = $4M The life has the following Probability distribution. Life Probability 7 0.20 8 0.50 9 0.30 MARR = 8% -Compute the conventional B/C ratio for a life of 8 years.

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(Multiple Choice)

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Question 1

Correct Answer:

Verified

A small town is considering two potential alternatives for a garbage collection system. The following cost data has been compiled. If the interest rate is 6%, Compute the ?B /?C ratio. Year System A System B 0 -\ 250,000 -\ 375,000 1-30 20,000 32,000 30 40,000 50,000

Free

(Multiple Choice)

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(35)

Question 2

Correct Answer:

Verified

The office of management and Budget (OMB) stipulates that a 7% interest rate be used in economic analysis of federal projects.

Free

(True/False)

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(42)

Question 3

Correct Answer:

Verified

True

Case Study 16 A project has the following cost and benefit data. Initial Cost = $15M Annual O&M Cost = $500K Annual Benefit = $4M The life has the following Probability distribution. Life Probability 7 0.20 8 0.50 9 0.30 MARR = 8% -Compute the conventional B/C ratio for a life of 7 years.

(Multiple Choice)

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Question 4

Case Study 16 A project has the following cost and benefit data. Initial Cost = $15M Annual O&M Cost = $500K Annual Benefit = $4M The life has the following Probability distribution. Life Probability 7 0.20 8 0.50 9 0.30 MARR = 8% -Compute the conventional B/C ratio for a life of 9 years.

(Multiple Choice)

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Question 5

Modified B/C ratio may be stated as, Modified B/C ratio = (E.W. of Benefits)/ (E.W. of initial costs + E.W. of operating and maintenance costs).

(True/False)

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Question 6

Case Study 16 A project has the following cost and benefit data. Initial Cost = $15M Annual O&M Cost = $500K Annual Benefit = $4M The life has the following Probability distribution. Life Probability 7 0.20 8 0.50 9 0.30 MARR = 8% -Compute the conventional B/C ratio using the expected EUAC.

(Multiple Choice)

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Question 7

A public sector project will have the following cash flows. Annual benefits = $900,000 Expected annual dis-benefits (quantifiable) = $50,000 Initial Cost = $10M Yearly maintained cost = $ 80,000. Life = 50 years. If MARR is 7%, what is the modified B/C ratio for this project?

(Multiple Choice)

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Question 8

For a project being considered by a city in Alabama, the following cost data is available. Determine both the modified and conventional B/C ratios. Initial cost = $10 million. O & M cost / year = $450,000 Estimated annual benefit = $850,000 Life = 25 Years Salvage value = $1 million MARR = 6%

(Short Answer)

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Question 9

Showing 1 - 9 of 9

Case Study 16 A project has the following cost and benefit data. Initial Cost = $15M Annual O&M Cost = $500K Annual Benefit = $4M The life has the following Probability distribution. Life Probability 7 0.20 8 0.50 9 0.30 MARR = 8% -Compute the conventional B/C ratio for a life of 8 years.

A small town is considering two potential alternatives for a garbage collection system. The following cost data has been compiled. If the interest rate is 6%, Compute the ?B /?C ratio. Year System A System B 0 -\ 250,000 -\ 375,000 1-30 20,000 32,000 30 40,000 50,000

The office of management and Budget (OMB) stipulates that a 7% interest rate be used in economic analysis of federal projects.

Case Study 16 A project has the following cost and benefit data. Initial Cost = $15M Annual O&M Cost = $500K Annual Benefit = $4M The life has the following Probability distribution. Life Probability 7 0.20 8 0.50 9 0.30 MARR = 8% -Compute the conventional B/C ratio for a life of 7 years.

Case Study 16 A project has the following cost and benefit data. Initial Cost = $15M Annual O&M Cost = $500K Annual Benefit = $4M The life has the following Probability distribution. Life Probability 7 0.20 8 0.50 9 0.30 MARR = 8% -Compute the conventional B/C ratio for a life of 9 years.

Modified B/C ratio may be stated as, Modified B/C ratio = (E.W. of Benefits)/ (E.W. of initial costs + E.W. of operating and maintenance costs).

Case Study 16 A project has the following cost and benefit data. Initial Cost = $15M Annual O&M Cost = $500K Annual Benefit = $4M The life has the following Probability distribution. Life Probability 7 0.20 8 0.50 9 0.30 MARR = 8% -Compute the conventional B/C ratio using the expected EUAC.

A public sector project will have the following cash flows. Annual benefits = $900,000 Expected annual dis-benefits (quantifiable) = $50,000 Initial Cost = $10M Yearly maintained cost = $ 80,000. Life = 50 years. If MARR is 7%, what is the modified B/C ratio for this project?

For a project being considered by a city in Alabama, the following cost data is available. Determine both the modified and conventional B/C ratios. Initial cost = $10 million. O & M cost / year = $450,000 Estimated annual benefit = $850,000 Life = 25 Years Salvage value = $1 million MARR = 6%

Making Economic Decisions

Estimating Engineering Costs and Benefits

Interest and Equivalence

Equivalence for Repeated Cash Flows

Present Worth Analysis

Annual Cash Flow Analysis

Rate of Return Analysis

Choosing the Best Alternative

Other Analysis Techniques

Uncertainty in Future Events

Depreciation

Income Taxes for Corporations

Replacement Analysis

Inflation and Price Change

Selection of a Minimum Attractive Rate of Return

Accounting and Engineering Economy

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