Case Study 16
a Project Has the Following Cost and Benefit

Multiple Choice

Case Study 16
A project has the following cost and benefit data.
Initial Cost = $15M
Annual O&M Cost = $500K
Annual Benefit = $4M
The life has the following Probability distribution.
$$\begin{array} { l l } \text { Life } & \text { Probability } \\7 & 0.20 \\8 & 0.50 \\9 & 0.30\end{array}$$ MARR = 8%
-Compute the conventional B/C ratio for a life of 9 years.

A) 1.290
B) 1.183
C) 1.286
D) 1.379