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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
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 an MARR of 12% per year, and expects every public works project of have a B/C ratio of at least 1.0, then what is the maximum investment that will he allowed for the dike? Assume that the flood occurs in the middle of each five-year period. $643,000 $854,000 $1,441,000 $1,800,000
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