The government is considering constructing a new urban freeway for $500 million. This would save 30...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
The government is considering constructing a new urban freeway for $500 million. This would save 30 000 commuters 10 000 hours a day (10 minutes each way) for 200 days a year. Suppose that the road can be built in one year, commuters value their travel time savings at $20 per hour and the road has a life of 30 years after year 1 and a residual value estimated at cost at $500 million in year 32. There are no other costs or benefits. i. Would the road provide a net social benefit with a discount rate of 7 per cent? i) Would the road provide a net social benefit with a discount rate of 7 per cent? Now suppose that the government charges a road toll of $2.50 each way and that traffic falls to 20,000 commuters twice a day. ii) What would be the financial outcomes using a 7 per cent discount rate? iii) What would be the net social benefit if the remaining commuters had an average value of travel time of $25 per hour? bir The government is considering constructing a new urban freeway for $500 million. This would save 30 000 commuters 10 000 hours a day (10 minutes each way) for 200 days a year. Suppose that the road can be built in one year, commuters value their travel time savings at $20 per hour and the road has a life of 30 years after year 1 and a residual value estimated at cost at $500 million in year 32. There are no other costs or benefits. i. Would the road provide a net social benefit with a discount rate of 7 per cent? i) Would the road provide a net social benefit with a discount rate of 7 per cent? Now suppose that the government charges a road toll of $2.50 each way and that traffic falls to 20,000 commuters twice a day. ii) What would be the financial outcomes using a 7 per cent discount rate? iii) What would be the net social benefit if the remaining commuters had an average value of travel time of $25 per hour? bir
Expert Answer:
Answer rating: 100% (QA)
i To determine if the road would provide a net social benefit with a discount rate of 7 percent we need to calculate the present value of the benefits ... View the full answer
Related Book For
Posted Date:
Students also viewed these economics questions
-
Managing Scope Changes Case Study Scope changes on a project can occur regardless of how well the project is planned or executed. Scope changes can be the result of something that was omitted during...
-
THE SHOPPES AT RIVERSIDE Fonda L. Carter, Columbus State University Kirk Heriot, Columbus State University CASE DESCRIPTION This case asks the students to recommend a decision to a group of...
-
Read the case study "Southwest Airlines," found in Part 2 of your textbook. Review the "Guide to Case Analysis" found on pp. CA1 - CA11 of your textbook. (This guide follows the last case in the...
-
Write a program that displays the color study shown at right, which gives Albers squares corresponding to each of the 256 levels of blue (blue-to-white in row major order) and gray (black-to-white in...
-
Based on the information provided in Exercise 2-6B, prepare a statement of owners equity assuming Lopez had a net loss of $2,000.
-
The size of stomatal openings can_______ due to the activities of guard cells.
-
Your instructor will divide your class randomly into groups of four to six people. Acting as a team, with everyone offering ideas and one person serving as official recorder, each group will be...
-
Fibrous Incorporated makes products from rough tree fibers. Its product line consists of five items processed through one of five machines. The machines are not identical, and some products are...
-
Solve the following DES. a) y (4) - (3) -3y"+5y'-2y=0
-
Decision analyst Sandy Baron has taken a job with an up-and-coming consulting firm in San Francisco. As part of the move, Sandy will purchase a house in the area. There are two houses that are...
-
The passive activity loss rules apply to S corporations but not to C corporations. True or False
-
The income statement has been prepared by Daisy Ltd's accountant for the current year ending December 31, 2022 is as follow: Sales 8,000,000 Cost of goods sold 5,400,000 ...
-
A firm is currently partially financed with zero-coupon debt that promises to repay bondholders $200 at maturity. These bonds mature one year from today at t-1. The firm is in a very risky industry,...
-
The Mexican inflation rate is 3.11 per year. One year ago the spot exchange rate was 0.22 BRL (Brazilian Reals) per MXN (Mexican Pesos). Today it is 0.27 BRL (Brazilian Reals) per MXN (Mexican...
-
CSU, Inc., is a calendar year S corporation. CSU's Form 1120S shows nonseparately stated ordinary income of $120,000 for the year. Taewon owns 30% of the CSU stock throughout the year. The following...
-
At the 1 January 20X1 the balance on Alex's plant and equipment cost account was 67,400 and accumulated depreciation was 13,400. Plant and equipment are depreciated at 12.5% per annum using the...
-
Trusts are used for various purposes, but the most common reasons for using a trust to transfer assets from an estate are (1) to attain income and estate tax savings and (2) to conserve property over...
-
Show that the peak of the black body spectrum as a function of ? is given by eq. (22.14) kg T Wmax = 2.82
-
Bill Barriers, the president of MightySoft software company is about to introduce a new computer operating system called DoorKnobs. Because it is easier to swap files with people who have the same...
-
There are two types of electric pencil-sharpener producers. High-quality manufacturers produce very good sharpeners that consumers value at $14. Low-quality manufacturers produce less good ones that...
-
We begin again with Charlie of the apples and bananas. Recall that Charlies utility function is U(x A , x B ) = x A x B . Suppose that the price of apples is 1, the price of bananas is 2, and...
-
What is the difference between internal and external audiences?
-
Like most major corporations, the U.S. Census Bureau has multiple, conflicting audiences, among them the president, Congress, press, state governments, citizens (both as providers and users of data),...
-
Listed here are several things an organization might like its employees to do: 1. Write fewer emails. 2. Volunteer at a local food pantry. 3. Volunteer to recruit interns at a job fair. 4. Attend...
Study smarter with the SolutionInn App