Selection of the project.

Question

Problem 09.029 Two Alternative Comparison One of two alternatives will be selected to reduce flood damage in a rural community in central Arizona. The estimates associated with each alternative are available. Use B/C analysis at a discount rate of 8% per year over a 20-year study period to determine which alternative should be selected. For analysis purposes only, assume that the benefits of reduced flood damage are available in years 7, 13, and 18 of the study period. Retention Pond Channel Initial Cost, $ 920,000 2,400,000 Annual Maintenance, $/Year 92,000 30,000 Reduced Flood Damage, $ 200,000 775,000 The AB/C ratio is The alternative that should be selected is the [retention pond

Answer 1

Question

Chapter 10, Problem 19P

To determine

Selection of the project.

Expert Solution & Answer

Trending nowThis is a popular solution!

See solution

Check out sample textbook solution

Students have asked these similar questions

Problem 09.029 Two Alternative Comparison One of two alternatives will be selected to reduce flood damage in a rural community in central Arizona. The estimates associated with each alternative are available. Use B/C analysis at a discount rate of 8% per year over a 20-year study period to determine which alternative should be selected. For analysis purposes only, assume that the benefits of reduced flood damage are available in years 7, 13, and 18 of the study period. Retention Pond Channel Initial Cost, $ 920,000 2,400,000 Annual Maintenance, $/Year 92,000 30,000 Reduced Flood Damage, $ 200,000 775,000 The AB/C ratio is The alternative that should be selected is the [retention pond

Four mutually exclusive projects are being considered for a new two-mile jogging track. The life of the track is expected to be 80 years, and the sponsoring agency's MARR is 12% per year. Annual benefits to the public have been estimated by an advisory committee and are shown below. Use the IRR method to select the best jogging track. Alternative A B D Initial Cost $62,000 $52,000 $150,000 $55,000 Annual benefits $10,000 $8,000 $20,000 $9,000 IRR 16.1% 15.4%

Four mutually exclusive projects are being considered for a new 2-mile jogging track. The life of the track is expected to be 85 years, and the sponsoring agency's MARR is 9% per year. Annual benefits to the public have been estimated by an advisory committee and are shown below. Use the B-C method (incrementally) to select the best jogging track. Initial cost Annual benefits B-C ratio The best jogging track is alternative A $52,000 $7,500 1.60 Perform the incremental B-C Analysis. Fill-in the table below. (Round to two decimal places.) Alternative A с B D B $62,000 $10,500 1.88 C… Alternative Inc. B-C ratio 1.60 C $57,000 $9,000 1.75 D $150,000 $19,000 1.41 Is the alternative acceptable? Yes Yes Yes Yes