Question: Two routes are under consideration for a new interstate highway: a long intervalley route and a short transmountain route. The table below summarizes characteristics of

Two routes are under consideration for a new interstate highway: a long intervalley route and a short transmountain route. The table below summarizes characteristics of both routes.

Regardless of which route is selected, the volume of traffic is expected to be 400,000 vehicles per year. If the vehicle operating costs are assumed to be $0.30 per kilometer, which of the two should be implemented? Use a B/C analysis and an interest rate of 8% per year.

Note: no credit will be awarded if the decision is not based on a B/C analysis.

	Intervalley	Transmountain
Initial Cost, $	25,000,000	45,000,000
Maintenance cost, $/year	150,000	35,000
Length, kilometers	25	10
Life, years	100	100

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related General Management Questions!

On January 1, 2023, Pulaski, Incorporated, acquired a 60 percent interest in the common stock of Sheridan, Incorporated, for $372,000. Sheridan's book value on that date consisted of common stock of...

One of the four ovens at a bakery is being considered for replacement. A new oven costs $80,000, but this price includes a complete guarantee covering all maintenance costs for the first 2 years and...

Two routes are under consideration for a new interstate highway. The long intervalley route would be 25 kilometers in length and would have an initial cost of $25 million. The short transmountain...

6. Two different routes are under consideration for a new interstate highway as follows in the table below. For either route, the volume of traffic will be 400,000 cars per year. These cars are...

SLOVE USING EXECL SHOW THE TABLE AND FORULMAS FOR THUMBS UP!!!!!!!!!!!!!!!!!!!!!!!!!!!! 3. 8.5 Two different routes are under consideration for a new interstate highway: Table P8.5 Length of Annual...

Two different routes are under consideration. for a new interstate highway: " Length of First Annual Highway Cost Upkeep Cost The "long" 22 miles $21 million $140,000 route Transmountain shortcut 10...

Two routes are under consideration for a new highway that will take two years to complete. The long intervalley route would be 25 miles in length and would have an initial cost of $50 million for the...

Two different routes are under consideration for a new interstate highway: TABLE P8.5 Length of Highway First Cost Annual Upkeep The long route 22 miles $21 million $140,000 Transmountain shortcut 10...

Two different routes are under consideration for a new interstate highway: TABLE P16.13 For either route, the volume of traffic will be 400,000 cars per year. These cars are assumed to operate at...

"The National Highway System (NHS) is a network of strategic highways within the United States, including the Interstate Highway System and other roads serving major airports, ports, rail or truck...

On March 1, Bear Mountain Tours borrowed $1500. Three equal payments are required, on April 30, June 20, and August 10, as well as a final payment of $400 on September 30 of the same year. If the...

Describe the process of infection by Mycobacterium tuberculosis. Does infection always lead to active tuberculosis? Why or why not? How is exposure to M. tuberculosis detected in humans?

Internal auditors must continue to expand their professional knowledge and abilities. For example, a practicing internal auditor may A . Complete 3 0 hours of CPE annually or 6 0 hours over 2 years....

Tom currently works as a check out clerk at Toots Grocery but is thinking of quitting his job to attend college full time next semester. Which of the following would be considered an opportunity cost...