Problem-
Bombay. Costs, savings (due to reduced traffic police requirement), and estimated values of perceived benefits and disbenefits of the public for the three Proposals are given below
|
Proposals
|
1
|
2
|
3
|
|
Public benefits/ year
|
$650,000
|
$46500
|
$750,000
|
|
Public dis-benefit/ year
|
$325,000
|
0
|
0
|
|
Initial construction cost
|
$20,000,000
|
$16,000,000
|
$X
|
|
Maintenance cost/ year
|
$950,000
|
$680,000
|
$520,000
|
|
Traffic police operating cost saving/ year
|
$185,000
|
0
|
0
|
The planning period is 30 years. Salvage values are zero.
Determine
(a) The benefit minus cost for Proposal 1 if the interest rate 5%.
(b) The preferred (economically superior) Proposal if the interest rate is 4% and x = 28,000,000.
(c) The maximum value of x that would make Alternative 3 the preferred Alternative if the interest rate is 2%.
Additional Information-
The problem belongs to Civil Engineering and it is describe the benefit minus cost for proposals for road improvement proposals in Bombay. Three proposals are being weighed for their maximum benefits, interest rate, value and cost, etc.