Determine the benefit cost ratio for alternative two

Reference no: EM13824995

Problem-

There are two Alternative proposals to improve traffic flow in Downtown Bangalore, India. Costs and monetary equivalents of benefits and disbenefits are listed in the Table below. The planning period is n years. Salvage values are zero. The interest rate is X%.

	Alternative #1	Alternative #2
Initial road construction cost	$29,800,000	$11,000,000
Road maintenance cost/year	$350,000	$210,000
Improved traffic flow/year	$1,200,000	$750,000
Reduced noise pollution/year	$300,000	$ 0
Improved road safety/year	$460,000	$190,000
Reduced traffic policing cost/year	$120,000	$ 0
Increased air pollution/year	$55,000	$120,000
Reduced car idling time/year	$85,000	$ 0

Determine-

(a) the benefit cost ratio for Alternative 2, if n = 30 and x = 3

(b) the minimum value of n that would make Proposal acceptable if x = 2%

Additional Information-

The problem belongs to Civil Engineering and it is explain about proposals for reducing traffic in Bangalore city. The monetary and cost benefits have been given. The benefit to cost ratio for the 2 proposals, the minimum value for the proposals in addition to the preferred alternative has been calculated in the answer.

Reference no: EM13824995

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