Problem
The city council is still conducting a cost-benefit analysis for a new bridge, but it is now estimated that drivers will not save any time driving. All other estimates remain unchanged:
1) The construction materials for the bridge will cost $80 million upfront.
2) The maintenance costs are estimated at $7 million per year for the life of the bridge.
3) The hourly wage for construction workers on this project is $19.50 per hour. These workers could have earned $15.50 in other jobs in the community and will spend 0.5 million hours completing the project.
4) The new bridge is expected to save two lives each year, and individuals estimate the value of a life at $9 million on average.
5) To find the discount rate use this infomration: the before tax return to a firm is 14%.
Determine the net benefit/cost of the project. Should the city council approve the project?
To save you time, simply list the calculated benefits, then list calculated costs and the net of the two.