The recommended plan for the conversion of an existing two-lane roadway to a four-lane freeway is Plan B, as it would upgrade the existing 2 lanes and add 2 new adjacent lanes. This is determined by the Cost Benefit Analysis for Plan A, B and C. The Cost Benefit Analysis is conducted using the given costs such as incremental operating cost, value of time savings and average accident cost. The Cost Benefit Analysis is conducted at a MARR of 8%. The results of the Cost Benefit Analysis are sensitive to changes in the MARR.

## Cost Calculation

The cost calculation of the plans consists of the cost of construction, maintenance and operations, incremental operating cost, value of time savings and average accident cost. The incremental operating cost for autos and trucks, value of time savings for autos and trucks, and the average accident cost are common to all plans. The cost of construction, maintenance and operations varies for each plan.

## Benefit Calculation

The benefits of the plans are calculated by taking into consideration the traffic volumes, travel time savings and the reduction in accidents that would be realized from the plans. The traffic volumes are projected to be 57,000 passenger vehicles and 3,000 trucks per day. The travel time savings are determined by the incremental operating cost for autos and trucks, value of time savings for autos and trucks and the average accident cost. The reduction in accidents is determined by the average accident cost.

## Cash Flow and Cost Benefit Analysis

The cash flow and cost benefit analysis of the plans is conducted at a MARR of 8%. The cash flows are determined by subtracting the cost from the benefits of each plan. The cost benefit analysis is then conducted by comparing the net present value of the cash flows. The plan with the highest net present value is chosen as the recommended plan.

## Related Questions

• What is the traffic volume projected for the existing two-lane roadway?
• What is the incremental operating cost for autos?
• What is the incremental operating cost for trucks?
• What is the value of time savings for autos?
• What is the value of time savings for trucks?
• What is the average accident cost?
• What is the cost of construction for Plan A?
• What is the maintenance and operations cost for Plan B?
• What is the travel time savings for Plan C?
• What is the reduction in accidents for Plan A?