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
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- Assume that you are approached to assess a venture of building another bridge. Which of the following factors is the LEAST important in terms of engineering economics. a. number of vehicles in the city b. current interest rate c. cost structure d. service life of the bridgePlease no written by hand and no emage Solve in excel Carp, Inc. wants to evaluate two machines for packaging their products.Machine A:Initial cost is $700,001st year O&M cost is 18,000; this cost increases $900 each year.The annual benefits are $154,000It can be sold at the end of 10 years useful life for $145,000 Machine B:Initial cost is $1,600,001st year O&M cost is 28,000; this cost increases $650 each year.The annual benefits are $300,000It can be sold at the end of 20 years useful life for $210,000The companies uses an interest rate of 15% Use annual cash flow analysis to decide which is the most desirable alternative.Suppose that instead Einar short sells 200 shares of German Power Weak Inc. at $40 each. NASDUCK now sets a margin requirement of 30%.(e) How much cash does Einar need to invest?(f) Calculate the margin call of NASDUCK if the price increases to $44.(g) Suppose the price falls to $25. How much cash can Einar take out from his margin account?(h) Suppose he takes out 50% of the amount in part (g). At what price threshold will Einar face a margin call by NASDUCK?
- 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?4. Consider the following a highway investment with the following characteristics: a. Construction cost: $50,000,000 b. Annual highway operating cost: $500,000 c. Service life: 25 years d. Interest rate: 6% 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 a. What is the benefit-cost ratio? stion 15 4b. What is the net benefit?1. Which of the following statements is incorrect?(a) Economic decisions are time invariant.(b) Time and risk arc are the most important factors in any investment evaluation.(c) For a large-scale engineering project, engineers must consider the impact of the project on the company’s financial statements.(d) One of the primary roles of engineers is to make capital expenditure decisions. 2 When evaluating a large-scale engineering project, which of the following items is important?(a) Expected profitability(b) Timing of cash nows(c) Degree of financial risk(d) All of the above 3. Which of the following statements defines the discipline of engineering economics most closely?(a) Economic decisions made by engineers.(b) Economic decisions related to financial assets.(c) Economic decisions primarily for real assets and service from engineering projects.(d) Any economic decision related to the time value of money. 4.Which of the following statements is not one of the four fundamental…
- A certain masonry dam requires 200,000 m³ of gravel for its construction. The contractor found two possible sources for the gravel with the following data: Source A Source B Average distance, gravel pit to dam site 3 km 1.2 km Gravel cost/m³ at pit ➖➖➖➖➖ P10 Purchase price of pit P800,000 Road construction necessary P450,000 Overburden to be removed at P4.20/m³ 90,000m³ ➖➖➖➖➖➖ Hauling cost/m³/km P4 P4 What is the Total Cost of Source A1. Using LCM Method (Unequal Lives) solve the problem: Two location alternatives A and B, where one can lease either of the two. Which option is preferable? Present Cost (PC) Annual Lease Cost (AL) Deposit Return (DR) Lease Term (n) Interest Rate (i) LOCATION A $ 15,000 $3,500 $1,000 6 years 15% LOCATION B $18,000 $3,100 $2,000 9 years 15%Two schemes: X & Y have been offered to Eric. Scheme X camands initial investment of $10K and $3k yearly benefit. While Scheme Y asks for initial investment of $12k and $3.5K yearly benefit. Which scheme Eric would choose considering discounted payback period while interest rate is 10%.
- 2. A construction firm plans to purchase new excavator. Two manufacturers offered to the company with the respective estimates below. Descriptions First cost, PhP (in 1000 Php) Annual M&O cost, PhP/ Year (in 1000 Php) Salvage value, PhP Economic life, Years Seller A 15,000 3,500 1,000 6 Seller B 18,000 3,100 2,000 9SUBJECT: ENGINEERING ECONOMICS (a) Identify the Given and the Unknown or what is being asked in the problem (b)Provide the formula to be used (c)Show the complete solution. The final answer is already provided.. At 5% annual interest, what is the difference in the present and future value of P100 paid at the endof each year for 10 years and P100 paid at the beginning of each year? Answer: P value difference = P38.61 F value difference = P62.89Costs and revenues (in thousands) 99 15 30 45 60 75 901052013550165 80195 Quantity per period (in thousands) Tools 1 O A