The transportation ministry is considering adding bike lanes and stations for bike renting to encourage biking and reduce traffic congestion. The ministry will allow advertisement (Ads.) in the bike stations to help recover expenses. The ministry is considering three major cities to start with, however, it can only execute one of them for the time being due to limited budget. The ministry's required rate of return is 5%. City City C City A 9,500,000 City B 8,500,000 Initial Cost ($) 15,000,000 200,000 180,000 250,000 Annual operating and maintenance costs Bike rentals (EGP per biker) 4.50 3.00 5.00 Number of bikers per year 50,000 60,000 90,000 Fees charged per Ad in the bike station 12,000 10,000 20,000 15 15 15 12 15 10 No. of Ads per year Reduced travel time (min per vehicle) due to less congestion Traffic Volume (#vehicles per year) Monetary Value of reduced travel time (EGP/min) Estimated life (years) 7,000 6,000 8,000 15 12 10 15 15 15 . a) Preparing for a Benefit-Cost Analysis, answer the following questions: What is the annual worth of Net Costs for cities A, B, & C? What is the annual worth of Net Benefits for cities A, B, & C? What is the BC ratio for each city A, B, & C based on AW analysis? . b) Using BC incremental comparison, which city is the best alternative? The transportation ministry is considering adding bike lanes and stations for bike renting to encourage biking and reduce traffic congestion. The ministry will allow advertisement (Ads.) in the bike stations to help recover expenses. The ministry is considering three major cities to start with, however, it can only execute one of them for the time being due to limited budget. The ministry's required rate of return is 5%. City City C City A 9,500,000 City B 8,500,000 Initial Cost ($) 15,000,000 200,000 180,000 250,000 Annual operating and maintenance costs Bike rentals (EGP per biker) 4.50 3.00 5.00 Number of bikers per year 50,000 60,000 90,000 Fees charged per Ad in the bike station 12,000 10,000 20,000 15 15 15 12 15 10 No. of Ads per year Reduced travel time (min per vehicle) due to less congestion Traffic Volume (#vehicles per year) Monetary Value of reduced travel time (EGP/min) Estimated life (years) 7,000 6,000 8,000 15 12 10 15 15 15 . a) Preparing for a Benefit-Cost Analysis, answer the following questions: What is the annual worth of Net Costs for cities A, B, & C? What is the annual worth of Net Benefits for cities A, B, & C? What is the BC ratio for each city A, B, & C based on AW analysis? . b) Using BC incremental comparison, which city is the best alternative
