1. A city needs a new pedestrian bridge over a local stream. The city uses an interest rate of 5%, and the project life is 30 years. The following data (in millions of dollars) summarizes the bids that were received.

	Bid A	Bid B
Construction cost	5.75	6.94
Annual operating costs	0.05	0.075
Annual revenue from operation	unknown	0.40
Other annual benefits to the city	0.22	0.25

What would the annual revenue of Bid A have to be for the two projects to be equivalent?

2.

The company is evaluating two investment opportunities. Alternative A uses a standard method and the cost and benefit can be accurately estimated. Due to technology uncertainty involved in Alternative B, three estimates have been developed. Given a MARR of 12% for the company, determine the best alternative using Annual Worth analysis. No credit will be given if using other approach.

	Alt A	Alt B
			Most Likely
Initial cost	35000	10000	15000	17500
Annual benefit	12000	8000	6500	4500
Salvage value	0	3500	2000	100
Service life	6	10	10	10