Fundamentals of Transportation/Evaluation/Problem2

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A new Southstar rail line is proposed. This project is expected to reduce travel time for 2,000 commuters by 30 minutes per day, in its completion year. The line only operates on weekdays (Monday-Friday). It will take 2 years to build and cost $320,000,000 total (Net Present Value). If the interest rate is 3 percent, above what value of time must average value of time for SouthStar Passengers be in order for the benefit/cost ratio to exceed 1.

  • Assume a 30 year lifespan. The interest rate is annual*