10-28. A state government is considering construction of a flood control dike having a life span of 15 years.

History indicates that a flood occurs every five years and causes $600,000 in damages, on average. If the state uses a MARR of 12% per year and expects every public-works project to have a B–C ratio of at least 1.0, what is the maximum investment that will be allowed for the dike?

Assume that the flood occurs in the middle of each five-year period. (10.7)

(a) $1,441,000

(b) $643,000

(c) $843,000

(d) $4,087,000

(e) $1,800,000 A flood control project with a life of 16 years will require an investment of $60,000 and annual maintenance costs of $5,000. The project will provide no benefits for the first two years but will save $24,000 per year in flood damage starting in the third year. The appropriate MARR is 12%

per year. Use this information to answer problems 10-29 and 10-30. Select the closest answer. (10.7)