1. Use PWs to calculate the benefit/cost ratio at i = 5% for a highway project. The first cost is $150,000 and O/M costs are $5,000 per year. There is no salvage value after 20 years. Time savings to users are worth $35,000 per year and neighborhood disruption is a disbenefit of $10,000 per year.Is this project attractivefrom a PW perspective?
2. What is the rate of return for the following project? It costs $300,000 to start and returns $50,000 the first year with a $2,500 increase each year thereafter. The project's life is 10 years.If the company could get 5% interest on their money instead of investing in this project, which should they choose?