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Question #3 (20 Points): The transportation ministry is considering adding bike lanes and stations for bike renting to encourage biking and reduce traffic congestion. The

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Question #3 (20 Points): 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 3%. City City A City B City C Initial Cost ($) 7,500,000 8,500,000 12,000,000 Annual operating and maintenance costs 100,000 150,000 185,000 Bike rentals (EGP per biker) 3.00 4.00 5.00 Number of bikers per year 55,000 70,000 85,000 Fees charged per Ad in the bike station 10,000 15,000 20,000 No. of Ads per year 20 20 Reduced travel time (min per vehicle) due to less congestion Traffic Volume (#vehicles per year) 5,000 7,500 8,000 Monetary Value of reduced travel time (EGP/min) Estimated life (years) 20 10 12 15 10 12 15 10 10 10 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

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