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Give your reasons + B E Oo PAc) (5 points) Perform an incremental BC analysis and answer the following: What is the Benefit-Cost (conventional with AW and DB in the denominator) of the last iteration of your analysis? (Use 4 decimals to report your answer) BC: d) (10 points) What alternative should be preferred? (Enter 1 for alternative 1, 2 for alternative 2) Alternative: Give your reasons i B E Co S'S PA(25 points total) In the city of Dallas Texas, there is a traffic problem during the rush hour. The city council is considering 2 projects to solve the problem for the next 20 years. Only one will be implemented. The MARR of the city is 10%. Alternative 1 - Extra lane in the highway An alternative is to build an extra lane in the highway. To do this, several properties need to be purchased at a cost of $60000. If the highway is expanded, then the traffic will be reduced representing savings of $8900 per year to local residents. Also, the local businesses will benefit from long-distance customers, that will likely visit different restaurants, malls, etc. increasing the profits of local entrepreneurs by $3800 per year. However, some buildings will have excessive noise due to the proximity of the new highway expansion. These buildings will devaluate their market value by $2500 including all of them. The cost of maintaining the highway is $40 per year. The construction time is 1 year. Construction cost is $13000. Alternative 2 - Mass Transit Metro System Another alternative is to build a metro system that will allow many residents to commute around the city without the need of owning a car. To do this, many properties need to be purchased at a cost of $300000, and the construction costs will be of $580000. If the metro is built, then the traffic will be greatly reduced, representing savings of $85620 per year to local residents. Also, the local businesses will benefit from long-distance customers that will visit many restaurants, malls, parks, etc. increasing the profits of local entrepreneurs by $113660 per year. The costs of operating and maintaining the metro are estimated to $40 per year. The construction time is 1 year. Please use the conventional BC-ratio with AW to calculate the following, and include the disbenefits (DB) in the denominator of the ratio, to answer the following questions. a) (5 points) What is the Benefit-Cost (conventional with AW and DB in the denominator) of alternative 1? (Use 4 decimals to report your answer) BC: b) (5 points) What is the Benefit-Cost (conventional with AW and DB in the denominator) of alternative 2? (Use 4 decimals to report your answer) BC: c) (5 points) Perform an incremental BC analysis and answer the following: What is the Benefit-Cost (conventional with AW and DB in the denominator) of the last iteration of your analysis? (Use 4 decimals to report your answer) BC
