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|CE361 Introduction to Transportation Engineering |Posted: Sat. 4 October 2008 |

|Homework 6 |Due: Wed. 15 October 2008 |

ECONOMIC EVALUATION AND RANKING OF ALTERNATIVES

Dear Consultant:

Whether in private or public matters, it is important to use money wisely and to know how to support decisions with correct calculations. You may work in a group of CE361 students not to exceed three in size. As usual, signatures (and printed names) of students in groups must appear at the top of the front page.

1. Vernita Lee, who is Oprah Winfrey’s mom, has a credit problem.

A. (5 points) If Mrs. Lee pays only the interest due on the $155,547 balance and the annual interest rate is 18.0 percent, how much will her next monthly payment be?

B. (5 points) Actually, a cardholder must also pay at least 4 percent of the outstanding balance each month. How much will this add to Mrs. Lee’s monthly payment?

C. (10 points) If Mrs. Lee pays the combined amount found in Parts A and B each month, how many months will it take her to pay off her debt to Valentina, Inc.? Assume that she makes no new charges to her account. (Using the Solver feature of a spreadsheet is acceptable, if you explain how your solution was found.)

2. Choosing between two proposed traffic safety projects. The intersection of Renner Blvd and Dell Ave has a very high crash rate. Two solutions are proposed.

• Project A: Build a $5.57 million overpass to separate the two roadways. The estimated value of the crashes avoided will be $513,000 per year over the next 20 years.

• Project B: Improve the geometry and signal timing at the intersection, at a cost of $418,000. The estimated value of the crashes avoided will be $61,800 per year over the next 20 years.

A. (10 points) What are PWB and PWC for each project? Show your cash flow diagrams and calculations. The current government interest rate is 5.4 percent/year.

B. (5 points) Using NPW, which project is better?

C. (5 points) Using BCR, which project is better?

3. Ranking alternatives. The PSR factor values in FTE Table 5.10 are not correct.

A. (11 points) What is the correct PSR Percentile value for each Segment A through K? Show your Percentile calculation for each of the five possible “raw” values – 1-5.

B. (11 points) Recompute the CPI for all eleven segments.

C. (8 points) How many road segment projects can be undertaken, given the county’s $600,000 budget? Which road segments will get improvements?

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