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ENGR 3360U Winter 2014

Unit 5

Present Worth Analysis

Dr. J. Michael Bennett, P. Eng., PMP,

UOIT,

Version 2014-I-01

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Unit 5 Present Worth Analysis

Change Record

2014!01 !nitial Creation

"e#t Cha$ter 5

2014!0152 %r& '&(& )ennett* P&Eng&* P(P ENGR 3360U Eng Eco

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2014!01 %r& '&(& )ennett* P&Eng&* P(P ENGR 3360U Eng Eco53

5&4 Ca$itali+ed Cost Calc,lations and Analysis

CAP!"A-!.E% C/" Present orth o a $roect that lasts oreer& Analysis ethodor

Goernent or $,7lic $roects8

Roads* das* 7ridges* $roect that 7asically $ossess ininite lie8

!ninite analysis $eriod 9n: in the $ro7le is either ery long*indeinite* or ininity&

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P;A

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E#a$le 5&3

?o ,ch sho,ld yo, set aside to $ay

@50;year aintenance or yo,r graestone*

at 4B

CC A;i 50;0&04 @1*250

Do, sho,ld set aside @1*250& "he $rinci$le

s, reains ,ndiinished ater the ann,al

dis7,rseent is ade&


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E#a$les o ca$itali+ed cost analyses

E#a$le 4 and ery long lie =indeinite>alternaties

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2014!01 %r& '&(& )ennett* P&Eng&* P(P ENGR 3360U Eng Eco5F

E#a$le 5&4

Pro7le %escri$tion

"he $ro$erty a$$raisal de$artent or ?alia# has ,st installed

ne sotare to trac residential aret al,es or $ro$erty ta#

co$,tations& "he anager ants to no the total eH,ialentcost o all ,t,re costs inc,rred hen the three co,nty ,dges

agreed to $,rchase the sotare syste&

! the ne syste ill 7e ,sed or the indeinite ,t,re* ind theeH,ialent al,e =a> no and =7> or each year hereater&

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2014!01 %r& '&(& )ennett* P&Eng&* P(P ENGR 3360U Eng Eco5I

CC E#a$le contin,ed

Pro7le Paraeters

"he syste has an installed cost o @150*000 and an additional

cost o @50*000 ater 10 years&

"he ann,al sotare aintenance contract cost is @5000 or the

irst 4 years and @I000 thereater&

!n addition* there is e#$ected to 7e a rec,rring aor ,$grade

cost o @15*000 eery 13 years& Ass,e that i 5 $er year or

co,nty ,nds.

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2014!01 %r& '&(& )ennett* P&Eng&* P(P ENGR 3360U Eng Eco5J

CC E#a$le contin,ed

%eterine

1& "he $resent orth eH,ialent cost at 58

2& "he ,t,re ann,al ao,nt =@;year> to hich theco,nty ill 7e coitted&

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econd te$ Nonrec,rring Costs

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"hird te$ 15*000 rec,rring 13 years

C/NKER" the rec,rring costs into an ann,ali+ed eH,ialent

ao,nt&

Call this 9A1:

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te$

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te$

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All "ogether

A1 15*000=A; @

I4F&00

1$%,%%%

$,%%%

&,%%%

$ 1% 1'

$%,%%%

1$,%%%

*

1$,%%%

CC1 150*000 50*000=P; @1I0*6J5

CC2 3000=P;;0&05 4F*010

CC3 =A1 L A2>;! =I4F 5000>;0&05 116*J40

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E#a$le 5&5 P,7lic Wors E#a$le

Good E#a$le o a P,7lic ector ty$e $ro7le

"o sites are c,rrently ,nder consideration or a 7ridge to cross

a rier in /ntario& "he north site* hich connects a aor

$roincial highay ith a loo$ aro,nd the city* o,ld alleiate

,ch o the local thro,gh traic& "he disadantages o this siteare that the 7ridge o,ld do little to ease local traic

congestion d,ring r,sh ho,rs* and the 7ridge o,ld hae to

stretch ro one hill to another to s$an the idest $art o the

rier* railroad tracs* and local highays 7elo& "his 7ridgeo,ld thereore 7e a s,s$ension 7ridge& "he so,th site o,ld

reH,ire a ,ch shorter s$an* alloing or constr,ction o a tr,ss

7ridge* 7,t it o,ld reH,ire ne road constr,ction&

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2014!01 %r& '&(& )ennett* P&Eng&* P(P ENGR 3360U Eng Eco51F

P,7lic Wors E#a$le cont&

"he s,s$ension 7ridge ill cost @50 illion ith ann,al

ins$ection and aintenance costs o @35*000& !n addition* the

concrete dec o,ld hae to 7e res,raced eery 10 years at a

cost o @100*000&

"he tr,ss 7ridge and a$$roach roads are e#$ected to cost @25illion and hae ann,al aintenance costs o @20*000& "he

7ridge o,ld hae to 7e $ainted eery 3 years at a cost o

@40*000& !n addition* the 7ridge o,ld hae to 7e sand7lasted

eery 10 years at a cost o @1J0*000& "he cost o $,rchasingrightoay is e#$ected to 7e @2 illion or the s,s$ension

7ridge and @15 illion or the tr,ss 7ridge& ! the !R is 6*

hat are the costsB

i h A l i

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2014!01 %r& '&(& )ennett* P&Eng&* P(P ENGR 3360U Eng Eco51I

)ridge Alternaties ,s$ension

Cash

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2014!01 %r& '&(& )ennett* P&Eng&* P(P ENGR 3360U Eng Eco51J

,s$ension )ridge Analysis

CC1 52 illion at t 0&

1

2

1 22

A @35*000

A 100*000= ; *6*10> @F*5IF

35* 000 = F*5IF> @F0J*FI3&0&06

A F

A ACC i

= −

= − = −

+ − + −= = = −

o# ** + suspension i!"e is

-52 i##ion - 709,783 = -$52.71 i##ion

U i 5 P W h A l i

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"r,ss )ridge Alternatie

$ $ $ $ $ $

0 1 2 3 4 5 ' 7 8 9 10 11 …..

A. in. = $20,000/

-25 (-2)

Paint& -40,000 Paint& -40,000 Paint& -40,000

'an()last& -1*0,000

Tr+ss Design&

i = 6%/year

n =

U it 5 P t W th A l i

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CC1 !nitial Cost @25( L =2(> @2F(

$ $ $ $ $ $

0 1 2 3 4 5 ' 7 8 9 10 11 …..

A. in. = $20,000/

-25 (-2)


'an()last& -1*0,000

Tr+ss Design&

i = 6%/year

n =


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Tr+ss Design&

$ $ $ $ $ $

0 1 2 3 4 5 ' 7 8 9 10 11 …..

-25 (-2)


'an()last& -1*0,000

i = 6%/year

n =

A. in. = $20,000/

2& Ann,al (aintenance is already an 9A: ao,nt

so A1 @20*000;year


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3* A2 Ann,al Cost o Painting

$ $ $ $ $ $

0 1 2 3 4 5 ' 7 8 9 10 11 …..

A. in. = $20,000/

-25 (-2)


'an()last& -1*0,000

Tr+ss Design& i = 6%/year

n =

Fo n "i&en #e o pinin", opue

A2 = -$40,000(A/F,'%,3) = -$12,5'4/e

Use $,/,#


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3* A3 Ann,al Cost o and7lasting

$ $ $ $ $ $

0 1 2 3 4 5 ' 7 8 9 10 11 …..

A. in. = $20,000/

-25 (-2)


'an()last& -1*0,000

Tr+ss Design& i = 6%/year

n =

Fo n "i&en #e o Sn!#sin", opue

A3 = -$190,000(A/F,'%,10) =-$14,421

Use The $,/,10 to conert to an e+ialent !$%ear ao+nt


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2014 ! 01 %r ' ( )ennett P Eng P(P ENGR 3360U Eng Eco5 25

)ridge ,ary or CC=6>

CC2 =A1LA2LA3>;i

CC2 =20*000L12*564L14*421>;0&06

CC2 @FI3*0I3;year

CC"otal CC1 L CC2 40&FI3 illion

33'+sension 5 -!"2.61 illion

33Tr+ss

- -40.67# illion

'elect the Tr+ss Design8

Documents

3360 Unit 05.3 2014-I-01