An industrial park is being planned near a river. The river occasionally floods, and as a result the industrial park planners are trying to decide how large of an embankment to build as protection. The embankment is expected to last 50 years. The MARR is 12%. If the water rises above the embankment (regardless how much) and flooding occurs, the cost is $300,000. Using the data below, find the expected annual costs in each case and determine which embankment height should be selected. Embankment height (meters) Initial Cost of Embankment Probability of water
An industrial park is being planned near a river. The river occasionally floods, and as a result the
industrial park planners are trying to decide how large of an embankment to build as protection. The
embankment is expected to last 50 years. The MARR is 12%. If the water rises above the
embankment (regardless how much) and flooding occurs, the cost is $300,000. Using the data below,
find the expected annual costs in each case and determine which embankment height should be
selected.
Embankment
height
(meters)
Initial Cost
of Embankment
Probability of water rising above
embankment in any given year
2.0 $100,000 0.330
2.5 $165,000 0.125
3.0 $300,000 0.040
3.5 $400,000 0.020
4.0 $550,000 0.01
Please attach an actual excel file too.
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