A public recreation area is under planning. The initial cost of the area is ($ 1,800,000), and
Question:
A public recreation area is under planning. The initial cost of the area is \(\$ 1,800,000\), and it will have maintenance costs of \(\$ 200,000 /\) year. It is estimated that 90,000 persons will visit the area each year. An estimated 40 percent of them will realize benefits of \(\$ 3.00,45\) percent will get benefits of \(\$ 4.50\), and 15 percent will perceive benefits of \(\$ 7.00\) with a visit.
a. Perform a benefit/cost ratio analysis to decide whether the area should be developed. Use a 30-year planning horizon, and \(i=6\) percent compounded annually.
b. Suppose each person is charged \(\$ 4\) to enter the area. Perform a \(B-C\) analysis to decide whether the area now should be developed, assuming those who receive a net negative benefit will not visit the recreation area.
Step by Step Answer:
Principles Of Engineering Economic Analysis
ISBN: 9781118163832
6th Edition
Authors: John A. White, Kenneth E. Case, David B. Pratt