Incremental benefit-cost ratio for alternative

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Two mutually exclusive alternatives are being considered as possible ways to reduce traffic congestion. User benefits come from reduced congestion once the project is complete (i.e., annual over the life of the project). User disbenefits come from increased congestion during 
construction (i.e., one time). The interest rate is 8%, and the life of each alternative is 15 years. Doing nothing IS an alternative. Which alternative, if either, should be chosen? What is the incremental benefit-cost ratio for each alternative?

Alternative

Alt A

Alt B

User benefits/year

2,100,000

2,600,000

User disbenefits

1,200,000

2,100,000

Initial cost

6,900,000

9,900,000

O&M Cost/year

750,000

825,000

(a) Use the conventional benefit-cost ratio

(b) Use the modified benefit-cost ratio

(c) Use the governmental benefit-cost ratio

Reference no: EM133064088

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