.png){kind=logo}
Solutions Manual For Contemporary Engineering Economics 7 th Edition By Chan Park
(All Chapters 1-16, 100% Original Verified, A+ Grade)
All Chapters Arranged Reverse:
16-1 This is The Original Solutions Manual For 7 th Edition, All other Files in The Market are Fake/Old/Wrong Edition. 1 / 4
Contemporary Engineering Economics, 7 th ed. ©2023
1 Copyright © 2023 Pearson Education, Inc.Chapter 16 Economic Analysis in the Service Sector
Valuation of Benefits and Costs
16.1
(a) • User’s benefits:
- Prevention (or retardation) of highway corrosion: resulting in lower highway
maintenance cost. This lower maintenance cost implies lower users’ taxes on gasoline, and so forth.
- Prevention of rust on vehicles: resulting in lower repair and maintenance
costs and higher resale value of vehicles.
- Prevention of corrosion to utility lines and damages to water supplies:
resulting in lower utility rates.
- Prevention of damages to vegetation and soil surrounding areas: increasing
land values and agriculture yields.
• Sponsor’s costs:
- Paying a higher tax.
- Unknown environmental damages due to using CMA
(b) The state of Michigan may declare certain sections of highway for experimental purpose. CMA may be used exclusively for a designated area and road salts for another area for an extended period time. Then, it investigates the impact of CMA on vegetation yields, which can be compared with those of areas from road salt use. The difference in vegetation yields may be quantified in terms of market value, and so forth.
16.2 Open end question (Not provided)
16.3 Open end question (Not provided)
- / 4
Contemporary Engineering Economics, 7 th ed. ©2023
2 Copyright © 2023 Pearson Education, Inc.Benefit-Cost Analysis
16.4
$117,400( / ,6%,5)
$494,535.76
$5,000 $48,830( / ,6%,5)
$210,691.49
$494,535.76
BC(6%)
$210,691.49
2.35 1
BPA CPA = = =+ = = =>
This project is justifiable based on the benefit-cost analysis.
16.5
$250,000( / ,6%,25) $50,000( / ,6%,25)
$3,207,500
$1,200,000 $100,000( / ,6%,25)
$2,478,340
$3,207,500
BC(6%)
$2,478,340
1.29 1
BPA PF
CPA =+ = =+ = = =>
16.6
B=$786,000(P/A,8%,15)+$200,000(P/F,8%,15)
= $6,790,799
′C=$233,000(P/A,8%,15)
= $1,994,359
I=$2,500,000
Thus, the net savings per dollar invested is:
$6,790,799
BC(8%) 1.51
$2,500,000 $1,994,359
== +
- / 4
Contemporary Engineering Economics, 7 th ed. ©2023
3 Copyright © 2023 Pearson Education, Inc.
16.7
(a) BC(i) analysis:
• Design A:
'
$400,000
$50,000( / ,8%,15) $427,974
$85,000( / ,8%,15) $727,556
I CPA BPA = == ==
• Design B:
'
$300,000
$80,000( / ,8%,15) $684,758
$85,000( / ,8%,15) $727,556
I CPA BPA = == ==
• Incremental analysis: Fee collections in the amount of $85,000 will be the
same for both alternatives. Therefore, we will not be able to compute the ()BC i ratio. If this happens, we may select the best alternative based on either the least cost ' ()IC+criterion or the incremental PI( )i criterion. Using the incremental PI( )i criterion,
'
0 ($427,974 $684,758)
PI(8%) 2.57 1
$100,000
AB BC I −
Δ−Δ − −
== => Δ
∴Select design A.
(b) Incremental analysis (A – C):
'
0 ($427,974 $556,366)
PI(8%) 2.57 1
$50,000
AC BC I −
Δ−Δ − −
== => Δ
∴Select design A.
- / 4
.png)