For Flood Control Purposes, the Government Is Considering Three Undeveloped

question 6

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

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Definitions:

Real Cigarette

A traditional cigarette made from tobacco and wrapped in paper, as opposed to electronic cigarettes or other alternatives.

Control Group

In experimental research, a group of subjects that does not receive the experimental treatment and is used as a benchmark to measure how the other tested subjects do.

Experimental Group

In research, this group is exposed to the intervention or treatment being tested, in contrast to the control group.

Homework

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