Answered step by step
Verified Expert Solution
Question
1 Approved Answer
The road development authority is evaluating the costs and benefits of three alternative routes for a mountain road that will connect a previously inaccessible community
The road development authority is evaluating the costs and benefits of three alternative routes for a mountain road that will connect a previously inaccessible community with the nearest town. This is a social welfare project and therefore the authority is determined to implement it even if there are no economic benefits to the authority. However, indirect economic benefits to the government and society are anticipated as indicated in the table below. Three mutually exclusive plans for routing the road are being considered. All three alternatives are assumed to have an economic life of 50 years. The MARR is assumed as 8% per year. (a) Which investment has highest B-C ratio? (5 points) (b) Which alternative should be selected if the authority must implement the project? B-C Analysis method and give reasons for your answer. (5 points) Routex Route Y Route Z Construction Cost 185,000 220,000 290,000 Annual maintenance cost 2.500 3,000 4,000 10.000 10,500 15,000 Annual savings on service provision to the community Annual benefit from tourism 7,600 8.900 9,400 Annual benefit from agriculture 1.900 2.300 3,800 Note: All amounts are given in OMR. Use conventional B-C method
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started