Engineering Economy 7th Edition by Leland Blank ,Anthony Tarquin

Exercise 9

The cost of grading and spreading gravel on a short rural road is expected to be $300,000. The road will have to be maintained at a cost of $25,000 per year. Even though the new road is not very smooth, it allows access to an area that previously could only be reached with off-road vehicles. The improved accessibility has led to a 150% increase in the property values along the road. If the previous market value of a property was $900,000, calculate the B/C ratio using an interest rate of 6% per year and a 20-year study period.