One of two alternatives will be selected to reduce flood damage in a rural community in central Arizona. The estimates associated with each alternative are available. Use B/C analysis at a discount rate of 8% per year over a 20-year study period to determine which alternative should be selected. For analysis purposes only, assume the flood damage would be prevented in years 3, 9, and 18 of the study period. Retention Pond Channel Initial cost, $ 880,000 2,900,000 Annual maintenance, $/year 92,000 30,000 Reduced flood damage, $ 200,000 600,000

Essentials Of Investments
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Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
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Chapter1: Investments: Background And Issues
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One of two alternatives will be selected to reduce
flood damage in a rural community in central
Arizona. The estimates associated with each alternative
are available. Use B/C analysis at a discount rate
of 8% per year over a 20-year study period to determine
which alternative should be selected. For analysis
purposes only, assume the flood damage would
be prevented in years 3, 9, and 18 of the study period.
Retention Pond Channel
Initial cost, $ 880,000 2,900,000
Annual maintenance, $/year 92,000 30,000
Reduced flood damage, $ 200,000 600,000

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