Engineering Economy 7th Edition by Leland Blank ,Anthony Tarquin

Exercise 2

In the United States, the average number of airplanes in the sky on an average morning is 4000. There are another 16,000 planes on the ground. Aerospace company Rockwell Collins developed what it calls a digital parachute -a panic-button technology that will land any plane in a pinch at the closest airport, no matter what the weather or geography and without the help of a pilot. The technology can be applied if a pilot is no longer capable of flying the plane or is panicked and confused about what to do in an emergency. Assume that the cost of retrofitting 20,000 commercial airplanes is $100,000 each and the plane stays in service for 15 years. If the technology saves an average of 30 lives per year, with the value of a human life placed at $4,000,000, what is the B/C ratio Use an interest rate of 10% per year.