Question
When red light cameras are installed at intersections, major accidents go down (which is a benefit) but rear-end collisions go up (which is a disbenefit).
When red light cameras are installed at intersections, major accidents go down (which is a benefit) but rear-end collisions go up (which is a disbenefit). The cameras will cost $750,000 to install and $10,000 per month to operate and maintain. It is expected that major accidents will go down by 1 per month but rear-end collisions will go up by 6 per month. The cost of each major accident is $150,000 and the cost of a rear-end collision is $12,000. At an interest rate of 0.5% per month, does the B/C ratio justify the cost of the cameras? Assume a useful life of 5 years (60 months) for the cameras
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