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The municipality is planning a new expansion for its LRT mass transport system. The total project budget is estimated to be $540,000,000 and is to
The municipality is planning a new expansion for its LRT mass transport system. The total project budget is estimated to be $540,000,000 and is to allocated on 6 equal payments of $90,000,000 each (Payment 1 before commencement (now), Payments 2-6 at the end of years 1, 2, 3, 4, and when the construction is done by the end of year 5). The feasibility assessment of this project will consider all cash ow items up to 25 years after construction. This project is expected to generate benets for the municipality valued as $32,000,000 per year by reducing travel times, congestion, and air pollution. It will also generate fare revenues of $1,500,000 per year. The Operation and Maintenance (0&M) costs for the proposed LRT is expected to be $9,500,000 per year. ** The revenues in terms of toll fares are to be treated as negative costs not as benets, i.e., there is no direct benet to the society by charging the commuters. If the social discount rate for this project is chosen to be 8%. A] Draw a cash ow diagram for 30 years. B] Calculate the benet/cost ratio of this project and comment on its feasibility. C] if the feasibility assessment period is changed to 100 years after construction, how would that impact the project's feasibility
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