Tree plantings and other beautification features

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A proposal has been made for improving the downtown area of a small town. The plan calls for banning vehicular traffic on the main street and turning this street into a pedestrian mall with tree plantings and other beautification features. This plan will involve actual costs of $6,000,000 and, according to its proponents; the plan will produce benefits and disbenefits to the town as follows:

Benefits:

Increased sales tax revenue $450,000 per year

Increased real estate property taxes $325,000 per year

Benefits due to decreased air pollution $80,000 per year

Quality of life improvements to users $70,000 per year

Disbenefits:

Increased maintenance $175,000 per year

a. Compute the BC ratio of this plan based on a

MARR of 10% per year and an infinite life for the project. (10.7)

b. How does the BC ratio change for a 20-year project life? (10.7)

Reference no: EM13771364

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