Basics of Engineering Economy 2nd Edition by Anthony Tarquin,Leland Blank

Exercise 9

A southwestern city that has 170,000 households is required to install treatment systems for the removal of arsenic from drinking water. The annual cost is projected to be $50 per household per year. Assume that one life will be saved every three years as a result of the arsenic removal system and that the EPA values a human life at $4.8 million. Use a discount rate of 8% per year and assume the life is saved at the end of each three-year period. Utilize a conventional B/C ratio to determine if the project is economically justified.