One of two alternatives will be selected to reduce flood damage in a rural community...
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Accounting
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 5% per year over a 20-year study period to determine which alternative should be selected. For analysis purposes only, assume that the benefits of reduced flood damage are available in years 3, 11, and 18 of the study period.
Retention Pond
Channel
Initial Cost, $
840,000
2,200,000
Annual Maintenance , $/Year
92,000
30,000
Reduced Flood Damage, $
200,000
700,000
The B/C ratio is ...............
The alternative that should be selected is the ................
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