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A county government is considering adding a new train station to an existing line, which would accommodate residents of a growing sub-division of the county.

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A county government is considering adding a new train station to an existing line, which would accommodate residents of a growing sub-division of the county. County authorities have hired you and your partners from an economic consulting firm to conduct a cost-benefit analysis of the proposed project. Relevant information related to the project include: 1. 680,000 total labor hours for construction - Half of the labor will be hired from other jobs at a market rate of $35 per hour, while the other half will be drawn from the ranks of the unemployed, who are willing to work for $15 per hour. 2. 1 million units of construction materials at a monopoly-market price of $60 per unit, which represents a 50% markup over marginal cost. 3. Annual maintenance costs of $2.7 million, assumed to begin at the end of the first year and to occur indefinitely into the future. 4. Time saving of commuters: It is estimated that approximately 600 local residents will save, on average, 30 minutes a day in commuting time, beginning at the end of the first year and continuing indefinitely. Current, and future, residents are assumed to work 5 days a week, 50 weeks a year, and value an hour of time at $45. 5. Lives saved: Because there will be fewer residents using their cars for commuting, it is assumed that 1 life will be saved per year, indefinitely, beginning at the end of the first year. A life is estimated to be worth $2 million. Construction of the new station would be completed within the first year (i.e. assume all construction costs are current). In addition, for this project, future values are discounted at 3%. (a) Enter a formula to calculate only the construction costs (i.e. exclude maintenance costs) of the station. (b) Enter a formula to calculate the present value of maintenance costs of the station over time. (c) Enter a formula to calculate the present value of the total benefits of the station over time. (d) Enter a formula to calculate the overall net benefit of the station. (e) Should the county build the station? Briefly explain

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