economy engineering

Project Description : A highway company is considering constructing a new highway road from Johor Bahru, Johor to Kota Bahru, Kelantan. The company will start the 500-kilometre project with purchasing land from local owner and state government costing about RM 30 million. The construction cost is estimated to be RM 85 million, and yearly maintenance is about RM 5 million. A traffic control building and sophisticated equipment should also be considered with a cost of RM 4 million and RM 1.5 million per year maintenance expenditures. The company will sell some construction equipment at the end of the construction period at the market value of RM 17 million. In addition, yearly toll fees will be collected amounting to RM 10 million, petrol consumptions save by the road users for RM 5 million, revenues received through the direct and indirect businesses of RM 6 million, and fees collected by the local and state authorities of RM 4 million. As a project manager, your team are required to propose the proposal of analysis whether the company should proceed with the highway road project or not, from the engineering economic analysis. In this project, you need to: a) To apply the Benefit-Cost Ratio Method for the project economic evaluation, either the project will proceed or not. State all assumptions required in your analysis, such as the period and interest rate per year (C3_Chapter 5)