Question 1: For this exercise the base year is 2021 and all costs are at 2010 values. (You should not reset the values in the Web TAG Databook User Parameters Sheet). Assume a discount rate of 3.5% and an operational scheme lifetime of 30 years. You are given the following additional information: The current number of vehicle journeys on the existing road network is 6,250,000 per annum. This is set to increase in the absence of the new road by 1.25% each year for the foreseeable future. On the other hand, if the new road is built the resulting increase in demand is forecast to be 3.5% each year, again for the foreseeable future. The total capital (construction) cost of the scheme is 150 million. (a) Scheme costs The capital cost is spread over two years: 2020 60,000,000 2021 90,000,000 Price changes in the construction sector are assumed to be the same as the rest of the economy The costs have already been adjusted for risk. You ne adjust the costs for optimism bias; explain why you are doing this (5%). Question 1: For this exercise the base year is 2021 and all costs are at 2010 values. (You should not reset the values in the Web TAG Databook User Parameters Sheet). Assume a discount rate of 3.5% and an operational scheme lifetime of 30 years. You are given the following additional information: The current number of vehicle journeys on the existing road network is 6,250,000 per annum. This is set to increase in the absence of the new road by 1.25% each year for the foreseeable future. On the other hand, if the new road is built the resulting increase in demand is forecast to be 3.5% each year, again for the foreseeable future. The total capital (construction) cost of the scheme is 150 million. (a) Scheme costs The capital cost is spread over two years: 2020 60,000,000 2021 90,000,000 Price changes in the construction sector are assumed to be the same as the rest of the economy The costs have already been adjusted for risk. You ne adjust the costs for optimism bias; explain why you are doing this (5%)