Microsoft® Excel Spreadsheet Exercise #9

How to use this section: Each exercise requires the development of an Excel spreadsheet. The exercises are keyed to sections in the text Engineering Economy, 5th edition, by Blank and Tarquin. Appendix A of the text is a complete primer for using Excel and the financial functions pertinent to engineering economic analysis. Sample problems are included in this appendix for setting up each function.

The spreadsheet exercises presented here are especially well suited to an engineering economy course with laboratory sessions or activities that help a student become more adept with spreadsheet-based solutions.

Spreadsheet Exercise #9

Capitalized Costs and Public Sector Projects

Exercise Objective: Apply the concepts of the benefit/cost ratio method and capitalized costs for public projects.

Blank and Tarquin Text Reference: Chapters 5 and 9

Problem Statement: Significant commuting traffic congestion from the suburbs to the city is forcing the construction of a new bridge. Once constructed, the following costs are estimated: maintenance each year, resurfacing periodically, and roadbed replacement after 25 years. The bridge will be used indefinitely. Assume a total of 250 commuter days per year and an interest rate of 10% per year.

To cover the costs of construction, resurfacing, and replacement, the transportation department is proposing to charge users a toll. Given the cost and travel-time savings estimates, compute the per-trip toll to be charged.

Helpful Comment: Use capitalized costs and the PW analysis to make the estimated PW of costs equal the estimated PW of benefits.