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Oregon Department of Transportation (ODOT), a public sector entity, is evaluating two alternate routes to 1-5 in the Portland area. Route 105 will cost ODOT
Oregon Department of Transportation (ODOT), a public sector entity, is evaluating two alternate routes to 1-5 in the Portland area. Route 105 will cost ODOT $2,500,000 in initial investment and will cost $250,000 per year to maintain the route. This route will benefit the public and local businesses at $1,000,000 per year. However, due to the length of the route and other considerations, there will be a toll charged to the users. The toll is estimated to cost the public $35,000 annually. The other route in consideration is Route 305 that will cost ODOT $3,000,000 in initial investment. The annual O&M is $200,000. The public benefit is $900,000 per year. With the Route 305 there is no issue of toll to the users. Both options do not have a salvage value. ODOT uses a 5 year planning horizon and 10% annual interest rate to evaluate their projects. Question 3 Part B: Provide the total annual benefit of the use of Route 105. Enter your answer in the form: 123456789
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