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Problem 3. (35 points) Two plans have been proposed for a high-speed passenger rail line between Cincinnati and Cleveland. The plans are summarized in the
Problem 3. (35 points) Two plans have been proposed for a high-speed passenger rail line between Cincinnati and Cleveland. The plans are summarized in the table below. Costs and benefits are in millions of dollars. Use benefit-cost ratio analysis with an interest rate of 7% to determine which, if either, of the plans should be accepted. Identical replacement assumption is applicable. Data Plan A Plan B Econ. Life , Years 20 10 Salvage Value $25 $22 Annual Benefits $32 Annual M & O Cost $4 $3 Initial Cost $230 $150 $28
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