The federal government is considering three sites in the National Wildlife Preserve for mineral extraction. The cash flows (in millions) associated with each site are given below. Use the B/C method to determine which site, if any, is best, if the extraction period is limited to 5 years and the interest rate is 10% per year. Site A Initial cost, $ Annual cost, $/year Annual benefits, $/year Annual disbenefits, $/year 50 3 20 0.5 Site B 90 4 29 1.5 Site C 200 6 61 2.1

The federal government is considering three sites in the National Wildlife Preserve for mineral extraction. The cash flows (in millions) associated with each site are given below. Use the B/C method to determine which site, if any, is best, if the extraction period is limited to 5 years and the interest rate is 10% per year. Site A Initial cost, $ Annual cost, $/year Annual benefits, $/year Annual disbenefits, $/year 50 3 20 0.5 Site B 90 4 29 1.5 Site C 200 6 61 2.1

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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