What is the incremental benefit-cost ratio

Assignment Help Business Economics
Reference no: EM133067028

A school is overcrowded and there are three options. The do-nothing alternative corresponds to continuing to use modular classrooms. The school can be expanded, or a new school can be built to "split the load" between the schools. User benefits come from improvements in school performance for the expanded and new schools. If a new school is built, there are more benefits because more students will be able to walk to school, the average distance for those who ride the school buses will be shorter, and the schools will be smaller and more "student friendly". The dis-benefits for the expanded school are due to the impact of the construction process during the school year. The interest rate is 8%, and the life of each alternative is 20 years. Which alternative should be chosen? What is the incremental benefit-cost ratio for each alternative?

Alternative

Expand

New School

User benefits/year

2,100,000

3,100,000

User disbenefits

800,000

0

Initial cost

8,800,000

10,400,000

O&M cost/year

950,000

1,700,000

(a) Use the conventional benefit-cost ratio

(b) Use the modified benefit-cost ratio

(c) Use the governmental benefit-cost ratio

Reference no: EM133067028

Questions Cloud

COMP1833 Software Quality Management Assignment : COMP1833 Software Quality Management Assignment Help and Solution, University of Greenwich - Assessment Writing Service
What is the stock required rate of return : What is the stock's required rate of return? Assume the market is in equilibrium with the required return equal to the expected return
Explain the logistics company in sultanate of oman : 1. Explain the logistics company in Sultanate of Oman? 2. What is the impact of logistics sector to company?
Evaluate turkey-eu economic relations : Evaluate Turkey-EU economic relations according to Sustainable Governance Indicators 2020.
What is the incremental benefit-cost ratio : A school is overcrowded and there are three options. The do-nothing alternative corresponds to continuing to use modular classrooms. The school can be expanded,
Solve the problem graphically using corner point method : At the current time, the firm has available 200 square feet of pine, 128 square feet of cedar, and 220 square feet of maple. Solve the problem graphically
Improvement and workflow automation : An essential tool in both process improvement and workflow automation is a process flow to understand the dynamics of how work is performed.
Alternatives using conventional benefit-cost analysis : The Highridge Water District needs an additional supply of water from Steep Creek. The engineer has selected two plans for comparison:
How should the company recognize its revenue : Assume the company cannot determine the percentage of completion reliably, how should the company recognize its revenue during year 2018

Reviews

Write a Review

Business Economics Questions & Answers

  Economics assignment

This document contains various important questions and their appropriate answers in the subject field of Economics.

  Demand and supply curves

Economics is the study of the principles governing the allocation of scarce means among competing ends when the objective of the allocation is to maximize the attainment of the ends.

  Long-run perfectly competitive equilibrium for the firm

Evaluate Government intervene and correct this situation?(a) Explain the concept of a concentration ratio. A rise in the price of magarine Explain the impact of external costs and external benefits on resource allocation long-run perfectly c..

  Supply and demand diagrams

Explain each of the following using supply and demand diagrams,  With the use of a graph, explain how these two programs affect cigarette consumption and the price of cigarettes.

  Case study: fisher-price toys

The case study of the Fisher-Price Toys, Inc., a popular case in basic economics and management from the prestigious Harvard Business School.

  Draw the production possibility curve

Draw the production possibility curve and a. Define consumer surplus and producer surplus.

  Tax revenue

The Australian government administers two programs that affect the market for cigarettes

  Maximize total welfare

How many tickets to sell to maximize total welfare.

  Difference between the cv and the ev

The change in consumer surplus (?CS) is not "theoretically" justifiable like the CV and EV but it continues to be the most widely used measure of consumer welfare change. Explain how this can be reconciled

  Depict von neumann-morgenstern utility index u in a diagram

Depict the von Neumann-Morgenstern utility index u in a diagram

  What is the market solution

What is the market solution (market price and quantity) and What is the total surplus of the society under the market solution

  Calculate gross national product and net national product

Calculate gross national product and net national product

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