CEIE 301 – Engineering and Economic models in civil engineering
7.7 The cost of grading and spreading gravel on a curvy rural road is expected to be $300,000. The road will have to be maintained at a cost of $25,000 per year. Even though the new road is not very smooth, it allows access to an area that previously could only be reached with off-road vehicles. The improved accessibility has led to a 150% increase in the property values along the road. If the previous market value of the property was $900,000, calculate the conventional B/C ratio using an interest rate of 6% per year and a 20-year study period. (5 points)
7.13 A government-funded wind-based electric power generation company in the southern part of the country has developed the following estimates (in $1000) for a new turbine farm. The MARR is 10% per year and the project life is 25 years. Calculate the (a) conventional B/C ratio, (b) modified B/C ratio, and (c) PI value. Benefits: $45,000 in year 0; $30,000 in year 5 Government savings:
$2,000 in years 1 through 20
Cost: $50,000 in year 0
Disbenefits: $3000 in years 1 through 10
(5 points)
7.16 The cash flows associated with a public works project in Buffalo, New York, are shown. Use the modified B/C ratio at a discount rate of 5% per year to determine the economic justification.
First cost, $ 50,000,000
AW of benefits, $/year 7,500,000
AW of disbenefits, $/year 1,700,000
M&O costs, $/year 900,000
Life of project, years 30
(5 points)
7.26 The two alternatives shown are under consideration for improving security at a county jail in Travis County, New York. Determine which one, if either, should be selected based on a B/C analysis, an interest rate of 7% per year, and a 10-year study period.
Extra Cameras
(EC)
New Sensors
(NS)
First cost, $ 38,000 87,000
Annual M&O, $ per year 49,000 84,000
Benefits, $ per year 110,000 87,000
Disbenefits, $ per year 16,000 —
(10 points)
7.29 A group of engineers responsible for developing advanced missile detection and tracking technologies such as shortwave infrared, thermal infrared detection, target tracking radar, etc. recently came up with six proposals for consideration. The present worth (in $ billions) of the capital requirements and benefits are shown. Determine which one(s) should be undertaken, if they are (a) independent and (b) Alternative A B C D E F
PW of Capital, $ 80 50 72 43 89 81
PW of Benefits, $ 70 55 76 52 85 84
(10 points)
