Carrying out cost benefit analysis on project

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Reference no: EM1310500

Q1) The State of Illinois is considering highway project which is expected to give benefits in form of time savings associated with speedier commute and safer driving conditions. Cost of materials for road is expected to be= $100 million. Average cost of labour for construction of road is= $30 per hour for= 1,125,000 hours of total labour. State will require operating and maintaining the road that will cost it $5 million per year. Road is expected to save 20 lives per year. On average, people are expected to accrue $2 million in earnings over their life span. By building the road, it is expected to keep 15 minutes on average per trip. It is expected that there will be 1,000,000 trips on road per year with the average salary of= $80,000 per driver based on= 2,000 work hours per year. Suppose a discount rate of 5%, carry out a cost benefit analysis on this proposed project over a four year period giving a recommendation and numerical explanation for your recommendation.

Reference no: EM1310500

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