General Directorate of Highways is considering the construction of a new highway through a scenic rural area. The road is expected to cost $6 million, with annual maintenance cost estimated at $20,000 per year. The improved accessibility is expected to result in additional income from tourists of $350,000 per year. Contrary to this income, the highway would cause agricultural income losses of $15,000 for the first year, 16,000 for the second, and amounts increasing by $1,000 per year. Also there will be $650,000 resurfacing cost every 6 years. If the road is expected to have a useful life of 30 years, apply the B/C method at a MARR of 6% by using Annual Equivalent Values to determine if the road should be constructed. If not, in order to make highway economically feasible by how much would the tourist income have to increase each year (starting in year two)?   

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Single-Payment Compound- Amount Factor Single-Payment Present Worth Factor A = P F[(₁ + 0²] P = F F = P(1 + i)" = P(F/P,i,n) Capital Recovery Factor [(1+i)n-11 i (1+i)n [(1+i)n- i (1+i)n A = P(A/P, i, n) P= A(P/A,i,n) Uniform Gradient Series for Feature Factor = F(P/F,i,n) Uniform-Series Present Worth Factor P = A [(1+i)n-1 F = Gx= [(¹-¹_n] = G(F/G‚i, n) Uniform Series Compound Amount - 11 F = A 1 − [(1+i)n n A = A₁ + G- (1 + ¹)² - 1 A=A₁+G(A/G, i, n) Sinking Fund Factor = A(F/A, i, n) = F(A/F,i,n) Uniform Gradient Series Factor Uniform Gradient Series Factor r= (1+0-1 CK |A=P[(₁+0=1] F i)n. N (1+i)n-1. A = A₁ - G -- A=A₁-G(A/G, i, n) m Single-Payment Compound- Amount Factor Single-Payment Present Worth Factor A = P F[(₁ + 0²] P = F F = P(1 + i)" = P(F/P,i,n) Capital Recovery Factor [(1+i)n-11 i (1+i)n [(1+i)n- i (1+i)n A = P(A/P, i, n) P= A(P/A,i,n) Uniform Gradient Series for Feature Factor = F(P/F,i,n) Uniform-Series Present Worth Factor P = A [(1+i)n-1 F = Gx= [(¹-¹_n] = G(F/G‚i, n) Uniform Series Compound Amount - 11 F = A 1 − [(1+i)n n A = A₁ + G- (1 + ¹)² - 1 A=A₁+G(A/G, i, n) Sinking Fund Factor = A(F/A, i, n) = F(A/F,i,n) Uniform Gradient Series Factor Uniform Gradient Series Factor r= (1+0-1 CK |A=P[(₁+0=1] F i)n. N (1+i)n-1. A = A₁ - G -- A=A₁-G(A/G, i, n) m

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