45. Video Solution A relocation of a short stretch of rural highway feeding into Route 390 northwest of Dallas is to be made to accommodate new growth. The existing road is now unsafe, and improving it is not an alternative.

Alternate new route locations are designated as East and West. The initial investment by government highway agencies will be $3,500,000 for East and $5,000,000 for West. Annual highway maintenance costs will be

$120,000 for East and $90,000 for the shorter location West. Relevant annual road user costs, considering vehicle operation, time en route, fuel, safety, mileage, and so on, are estimated as $880,000 for East and only $660,000 for West. Assume a 20-year service life and i 5 7 percent.

a. Clearly identify the annual equivalent benefi ts and costs of route West over route East.

b. Compute the appropriate B/C ratio(s) and decide whether East or West should be constructed.