A highway is to be built connecting Maud and Bowlegs. Route A follows the old road and

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A highway is to be built connecting Maud and Bowlegs. Route A follows the old road and costs \(\$ 4\) million initially and \$210,000/year thereafter. A new route, B, will cost \(\$ 6\) million initially and \(\$ 180,000 /\) year thereafter. Route \(\mathrm{C}\) is an enhanced version of Route B with wider lanes, shoulders, and so on. Route \(\mathrm{C}\) will cost \(\$ 9\) million at first, plus \(\$ 260,000\) per year to maintain. Benefits to the users, considering time, operation, and safety, are \(\$ 500,000\) per year for A, \(\$ 850,000\) per year for \(\mathrm{B}\), and \(\$ 1,000,000\) per year for \(\mathrm{C}\). Using a 7 percent interest rate, a 15 -year study period, and a salvage value of 50 percent of first cost, determine which road should be constructed.

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Principles Of Engineering Economic Analysis

ISBN: 9781118163832

6th Edition

Authors: John A. White, Kenneth E. Case, David B. Pratt

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