Two highway capacity improvement plans have been proposed for a congested suburban arterial. Select the most cost-effective
Question:
Two highway capacity improvement plans have been proposed for a congested suburban arterial. Select the most cost-effective alternative using present worth analysis. Assume an interest rate of 5 percent per year and a design life of 20 years for each alternative.
Alternative A entails improvements to traffic signals at an initial cost of $82,000 and a salvage value of $5000. Annual maintenance costs will be $700 per year.
Alternative B entails traffic signal improvements and addition of a left-turn lane at an initial cost of $72,000 and no salvage value. Annual maintenance costs will be $1200 per year, except in year 10, in which a rehabilitation will cost $14,000.
Engineering Economy
ISBN: 978-0132554909
15th edition
Authors: William G. Sullivan, Elin M. Wicks, C. Patrick Koelling