Question

-14Three designs have been proposed to improve traffic flow at a major intersection in a heavily traveled suburban area. The first alternative involves improved traffic signaling. The second alternative includes traffic-signal improvements and intersection widening for exclusive left turns. The third alternative includes extensive reconstruction, including a grade separation structure. The construction costs, as well as annual maintenance and user costs, are listed in the following table for each alternative.Determine which alternative is preferred based on economic criteria if the analysis period is 20 years and the annual interest rate is 15 percent. Show that the result is the same using the present worth, equivalent annual cost, benefit-cost ratio, and rate-of-return methods.

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