Docstoc

IENG 302_ Benefit Cost Examples

Document Sample
IENG 302_ Benefit Cost Examples Powered By Docstoc
					 Incremental Benefit Cost Analysis Example
                A           B     C                D        E       F        G




                                        Not Feasible
Benefits        174        180    136                  80   136     178       89
Disbenefits          4       60    10                  8    10           2    14
Costs           100        120     90                  80   70      110       50
B–D            1.7         1.0    1.4   0.9    1.8                 1.6       1.5
 C                       Cost Order: G E C A F B
G – DN: (From feasibility, (B – D) / C = 1.5                      Upgrade to G
E – G:     (136 – 89) – (10 – 14) = 51 = 2.55
                                                                  Upgrade to E
                 (70 – 50)              20
C – E:     (136 – 136) – (10 – 10) = 0 = 0                        Keep Proj. E
                 (90 – 70)               20
A – E:     (174 – 136) – (4 – 10) = 44 = 1.47                     Upgrade to A
                 (100 – 70)             30
 Incremental Benefit Cost Analysis Example
                A           B     C                D        E       F         G




                                        Not Feasible
Benefits        174        180    136                  80   136     178        89
Disbenefits          4       60    10                  8    10            2    14
Costs           100        120     90                  80   70      110        50
B–D            1.7         1.0    1.4   0.9    1.8                  1.6       1.5
 C                       Cost Order: G E C A F B
F – A:     (178 – 174) – (2 – 4) = 6 = 0.6
                                                                  Keep Proj. A
                (110 – 100)           10
B – A:     (180 – 174) – (60 – 4) = – 50 = – 2.5                  Best is Proj A
                (120 – 100)              20
Bonus Problem: B/C Build-Up Example
   Snack Fridge Viability
     Data:
        110 IE & EngM students
        48% will use snack fridge instead of going home
        Users average (2) drinks & (1) snack each week
        Mark-up is 10%, drink price is $.50, snacks $.75
        School year averages 32 weeks
        Fridge costs $495, lasts 8 yrs, 8% cpd annually

     If they save time & $$ on snacks & drinks, they
     can buy books , study more, and expect one of
     them to win a $5 500 national scholarship every
     4 years. But the vending company will quit
     donating $300 per year to their Tech Society

     Perform a B/C analysis – IE student perspective

				
DOCUMENT INFO
Shared By:
Categories:
Tags:
Stats:
views:4
posted:7/26/2012
language:Latin
pages:3