Present value of the increased income per participant

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Reference no: EM132015993

Suppose a proposed new road to be constructed in Virginia between Richmond and Petersburg will lower the average cost per trip by car from $5 to $4. Currently, 500,000 trips are made between the two cities per year. An estimate indicates that all other things being equal, the new road will increase the number of trips per year to 600,000. Calculate the annual benefits to motorists of the new road as based on their willingness to pay? A workshop designed to retain workers 55 years of age and older who have lost their jobs is proposed. Suppose the workshop will increase the income of each participant by $1000.00 per year for a period of 10 years. Calculate the present value of the increased income per participant with each of the following discount rates: 0%, 1%, 5%, and 10%? If the cost per participant is $8000 and all those costs are incurred in the first year, at what discount rates will the benefit-cost ratio of the project exceed 1?

Reference no: EM132015993

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