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# HW7SOL - Homework 7 Solution 1 Problem 7.5(a \$400,000...

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Homework 7 - Solution 1. Problem 7.5 (a) \$400,000 annual income to local businesses because of tourism created by new national park - benefit (b) Cost of fish from hatchery to stock lake at state park - cost (c) Less tire wear because of smoother road surface - benefit (d) Decrease in property values due to closure of gov’t research lab - disbenefit (e) School overcrowding because of military base expansion - disbenefit (f) Additional revenue to local motels because of extended national park season - benefit 2. Problem 7.6 A BOT project is one that involves a public-private partnership wherein the private partner is responsible for building, operating, and subsequently trans- ferring the project to a governmental entity. 3. Problem 7.8 The salvage value placed in the denominator because it is a recovery of cost, which is a consequence to the government. 4. Problem 7.14 (a) B = \$340,000 D = \$40,000 C = 2,300,000(0.06) + 120,000 = \$258,000 B/C = (340,000 - 40,000)/258,000 = 1.16 (b) Modified B/C = (340,000 - 40,000 - 120,000)/138,000 = 1.30 5. Problem 7.15 Use present worth, since most of the cash flows are already present dollars.

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HW7SOL - Homework 7 Solution 1 Problem 7.5(a \$400,000...

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