MIT1_201JF08_final

MIT1_201JF08_final - 1.201 / 11.545 / ESD.210...

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1.201 / 11.545 / ESD.210 Transportation Systems Analysis: Demand and Economics Fall 2008 Final Exam December 15, 2008 Rules for this Exam Please read the following rules carefully before starting this exam: 1. You MUST complete problems 1 and 2, which together are worth a total of 60 points. 2. Problems 3, 4, and 5 are each worth 20 points. You MUST choose EXACTLY 2 of these problems. 3. To be clear, you need answer 4 out of 5 problems on this exam, which must include problems 1 and 2. 4. This exam has a total of 100 points. 5. You have 3 hours to complete this exam. 6. You are allowed to use your notes from class, as well as any other notes or textbooks. 7. A calculator will be required to complete this exam. 8. Laptops, mobile phones, and PDA's are not allowed. 9. Please show all your work for maximum partial credit.
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1. Revenue Forecasting and Private Transportation Contracts This problem is worth 35 points, and is required The Mayor of New York City wants to replace the elevated Gowanus Expressway in Brooklyn with a tunnel so as to enable the development of prime Brooklyn waterfront property. He is interested in using the private sector to finance, construct, and operate this project, which will require tolling of the new facility. For the sake of this problem, let us assume: The average toll will be $4.50, and does not increase over time There is no inflation All parties use a discount rate of 10% Traffic on the Expressway is the same for every day of the year All years have 365 days The annual traffic on the first year of operation of the new facility is uncertain, but every year thereafter will be the same as the first Let us also assume that there are two bidders for this project who have, through their own analysis, worked out the following financial packages: Cost to Build (Present Value) Operation and Maintenance Costs + Expected Profits (Present Value) Firm A $650 Million $160 Million Firm B $700 Million $70 Million You are advising the mayor on this project, and have commissioned a traffic forecast for use by the various private players, which has the following results: Scenario Daily Traffic Worst Case 43,000 vehicles/day Expected 47,000 vehicles/day Best Case 51,000 vehicles/day It may be of use in this problem to recall that, for some |c| < 1.0, c i = c i = 1 1 c The following table may also be of use: n 1 2 4 8 10 15 20 25 30 40 50 75 99 i = 1 n .91 i 0.91 1.74 3.17 5.33 6.14 7.61 8.51 9.08 9.43 9.78 9.91 9.99 10.0
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Part I Traditional Contract Under the traditional contract structure, the winning bidder would build the new facility and then maintain and operate it while collecting all toll revenues for 99 years. At the end of 99 years of operations, ownership transfers over to the City. For this kind of contract, the bidders only reveal to the City their Cost to Build the facility. Please answer the following questions:
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This note was uploaded on 12/04/2011 for the course ESD 1.210j taught by Professor Mosheben-akiva during the Fall '08 term at MIT.

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MIT1_201JF08_final - 1.201 / 11.545 / ESD.210...

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