Business, 05.05.2020 05:30 2sally2

You are preparing a benefit cost analysis for a new highway. The traffic volume in year 1 is expected to be 500,000 vehicle-trips. The road will save 15 minutes for each vehicle trip. Motorists value their travel time at $15.00 per hour. Traffic volume will increase by 2% per year. With the improved travel speed there is a disbenefit to motorists in increased gasoline consumption. Assume that the disbenefit value is $100,000 per year in year 1 and that the disbenefit increases with traffic volume and that there is expected to be a 3% increase per year in gasoline price. If the road cost $25,000,000, the service life is 50 years and the interest rate is 6%, What is the benefit cost ratio

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