Perform a cost benefit analysis on proposed project

Assignment Help Finance Basics
Reference no: EM132443118

The State of Illinois is considering a highway project that is expected to provide benefits in the form of time savings associated with speedier commute and safer driving conditions. The cost of materials for the road is expected to be $100 million. The average cost of labor for construction of the road is $30 per hour for 1,125,000 hours of total labor. The state will need to operate and maintain the road which will cost it $5 million per year. The road is expected to save 20 lives per year. On average, people are expected to accumulate $2 million in earnings over their life span. By building the road, it is expected to save 15 minutes on average per trip. It is expected that there will be 1,000,000 trips on the road per year with an average salary of $80,000 per driver based on 2,000 work hours per year. Assuming a discount rate of 5%, perform a cost benefit analysis on this proposed project over a 4 year period providing a recommendation and numerical justification for your recommendation.

Reference no: EM132443118

Questions Cloud

How much of the drug would be a toxic dose : What locations in the nervous system are affected by the drug and Could a different form of administration make the drug safer
Develop new information security policy : If you were asked by your employer to develop a new Information Security Policy, where would you turn to find resources to build this policy?
Discuss the Long term care facility in Florida : Discuss the Long term care facility in Florida ?How long have you been in business? What degree(s) do you need to operate your business?
Describe the impact of telecommuting on energy conservation : Describe the impact of telecommuting on energy conservation, IT operational costs, "green computing," and shifts in telecommuters' lifestyles
Perform a cost benefit analysis on proposed project : Assuming a discount rate of 5%, perform a cost benefit analysis on this proposed project over a 4 year period providing a recommendation
Evaluates the operational and economic feasibility of kiosks : Write a proposal that evaluates the operational, technical, and economic feasibility of these kiosks.
Describe what information will need to collect from patient : Describe what information you will need to collect from patient and what steps you must take to ensure the services being rendered will be covered by insurance
Diagram the cash flows on a timeline : Diagram the cash flows on a timeline below and calculate the values requested in the boxes provided.
Ford company-capital budgeting problem : The market value of Fords' equity, preferred stock and debt are $7 billion, $3 billion, and $10 billion, respectively. Ford has a beta of 1.8

Reviews

Write a Review

Finance Basics Questions & Answers

  Explain what determines value for a shareholder

Explain what determines value for a shareholder. Identify short-term versus long-term result and balancing the interest of the shareholders versus society.

  What is the total rate of return for the firm

What is the total rate of return for the firm? Did the analysts prediction prove correct?

  Question regarding the financial ratio analysis

Select one of the publicly traded corporations listed below and obtain the most current SEC Form 10-K (annual financial report) from the company's web site

  An investor purchases 500 shares of abc stock on margin at

an investor purchases 500 shares of abc stock on margin at a price of 35 per share. assume an initial margin

  Market price if the bond has a par value

The yield to maturity is 7.7 percent and the bond matures in 21 years. What is the market price if the bond has a par value of $2,000?

  Factors to the development of eurocurrency

What are the main contributing factors to the development of eurocurrency?

  Representation-variance analysis

Variance analysis is very important for healthcare managers because it can be used to observe how well a healthcare organization is performing and also how close actual costs and revenues are to expected costs and revenues. However there are some ..

  Personal financial decisions

How could personal financial software assist you in your personal financial decisions?

  Calculate becher expected accounts payable balance

Calculate Becher's expected Accounts Payable balance. (Use a 360-day year for your calculations.)

  What will you pay for a share today

Antiques R Us is a mature manufacturing firm. The company just paid a dividend of $9, but management expects to reduce the payout by 4 percent per year, indefinitely. If you require an 11 percent return on this stock, what will you pay for a share..

  Will chapeau rouge have trouble hedging the chf cash flows

Should Chapeau Rouge accept the project? Suppose that Chapeau Rouge has a :400 million line of credit with its bank. Will Chapeau Rouge have trouble hedging the CHF cash flows?

  Find the riskless rate on the market

Cornfeld Company stock has beta of 1.1 and its expected return is 12%, whereas Goldstein Company stock has beta of 1.2 and its expected return is 12.3%.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd