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For flood control purposes the government is considering three undeveloped sites for a water detention area The estimated costs associated with each alternative are given below Use the conventional

For flood control purposes, the government is considering three undeveloped sites for a water detention area. The estimated costs associated with each alternative are given below. Use the conventional B-C ratio method, with AW as the equivalent-worth measure, to determine which alternative should be selected at an interest rate of 6% per year. Assume the site will be used for 17 years before being developed for other purposes.

  Site A Site B Site C
Initial Cost, $ 1,350,000 1,250,000 1,500,00
Annual Maintenance, $/yr 320,000 300,000 345,000
Annuel Benefits, $/yr 1,540,000 1,500,000 1,595,000
Annual Disbenefits, $/yr 530,000 500,000 560,000

a) What is the conventional B-C ratio for Site A?

b) What is the conventional B-C ratio for incremental A-B?

 

Apr 06 2020 Read more Less More

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