A New Line for New York MTA
Let’s suppose you are the Chief Executive of the New York MTA, the subway system that’s the lifeline of New York. Every year you get requests to build new lines on the subway. This time you have a request from a group of residents in Manhattan who want faster connectivity to Flushing Meadows in Queens.
For those of you who don’t know, Flushing Meadows is where the US Open tennis tournament happens every year. Residents are asking for a super fast train that makes only 1 stop and goes from Times Square on 42nd Street to Flushing Meadows.
The project will take 3 years to execute and your team estimates that the cost of the project will be $24 million US dollars spent equally over the 3 years.
Your team also estimates that the yearly ridership on this route will be as follows:
Year01234567 onwardsRidership 125,000 185,000 220,000 240,000 250,000
The opportunity cost of this project 4%.
Question: What is a reasonable price to charge per ride for this project to make sense?
Note: Round up your answer to two decimal points