Question
The ontario government is considering three new flood control projects for the Badger area. Projects A and B consist of permanent dikes. Project C is
The ontario government is considering three new flood control projects for the Badger area. Projects A and B consist of permanent dikes. Project C is a small dam. The dam will have recreation and irrigation benefits as well as the flood control benefits. Facts about the three projects are shown in the following table. Each project has a life of 25 years. The MARR is 10%. {Assume that each project has a BCR greater than 1}
Project A | Project B | Project C | |
First Cost (millions of $) | 201 | 230 | 409 |
Annual Benefits (millions of $) | 26.2 | 32.8 | 58.9 |
Annual Operating and Maintenance costs (millions of $) | 2.2 | 2.2 | 4.4 |
Part a - Use incremental benefit-cost to choose the best project
- What is the benefit-cost ratio on the increment from Project A to Project B (rounded to three decimal points eg. x.xxx)?
Your above selection is the current best.
-What is the benefit-cost ratio on the increment from the current best project to Project C (rounded to three decimal points eg. x.xx)?
-Which Project is the best choice based on Incremental BCR (Enter either 'A', 'B', or 'C')?
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