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[50] There are four different approaches for completing a public project, shown in the table below. The project has a 50 year life, and the
[50] There are four different approaches for completing a public project, shown in the table below. The project has a 50 year life, and the interest rate is 8%.
| Project A | Project B | Project C | Project D |
Benefits per year | $350,000 | $600,000 | $800,000 | $1,000,000 |
Cost | $1,850,000 | $2,200,000 | $3,000,000 | $4,200,000 |
Salvage | $150,000 | $250,000 | $310,000 | $385,000 |
O&M Cost per year | $220,000 | $300,000 | $450,000 | $510,000 |
Conventional B-C ratio with PW: PW(benefits of the proposed project) PW(total costs of the proposed project) B-c = PW(B) I - PW(MV)PW(O&M) (10-1) where PW() present worth of (): B benefits of the proposed project; I- initial investment in the proposed project; MV market value at the end of useful life; O&M- operating and maintenance costs of the proposed project. Modified B-C ratio with PW: PW(B) PW(O&M) 1 - PW(MV) (10-2) B C
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