For Flood Control Purposes, the Government Is Considering Three Undeveloped

Essay

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. $$\begin{array} { | l | l | l | l | } \hline & \text { Site } \mathrm { A } & \text { Site } \mathrm { B } & \text { Site } \mathrm { C } \\\hline \text { Initial cost, } \$ & \$ 1,350,000 & \$ 1,250,000 & \$ 1,500,000 \\\hline \text { Annual main tenance, } \$ / y r & \$ 320,000 & \$ 300,000 & \$ 345,000 \\\hline \text { Annual benefits, } \$ / y = & \$ 1,540,000 & \$ 1,500,000 & \$ 1,595,000 \\\hline \text { Annual disbenefits, } \$ / y r & \$ 530,000 & \$ 500,000 & \$ 560,000 \\\hline\end{array}$$