Question: A city is considering an infrastructur project that involves the construction of a new light rail transit ( LRT ) line to improve urban mobility
A city is considering an infrastructur project that involves the construction of a new light rail transit LRT line to improve urban mobility and reduce traffic congestion. The LRT line is expected to span linear kilometers and serve an estimated passengers per day. The following data has been provided for the project:
Costs:
Initial Construction Costs: $ billion
Annual Operating and Maintenance Costs: $ million
Rolling Stock Costs trains and carriages: $ million onetime cost
Interest Rate: for discounting future costs and benefits
Benefits:
Travel Time Savings: minutes per trip on average
Value of Time: $ per hour per passenger
Reduction in Vehicle Operating Costs: $ per trip
Reduction in Accident Costs: $ million annually
Environmental Benefits: $ million annually reduction in pollution and greenhouse gases
Additional Information:
The project lifespan is expected to years.
The light rail is expected to replace car trips daily.
The average car trip length replaced by the LRT is kilometers.
Please answer the following questions regarding the project:
A Calculate the total annual benefits of the LRT project.
B Calculate the Net Present Value NPV of the project over its year lifespan, including both costs and benefits.
C Determine the BenefitCost Ratio BCR for the project.
D Based on your calculations, provide a recommendation on whether the city should proceed with the construction of the LRT line. Justify your recommendation with the calculated metrics.
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