You work for the city as an engineer. Your boss instructs you to evaluate two potential options for an upcoming public project. You are instructed to recommend which one, if any, should be chosen. She tells you to use a B/C analysis.

Option X: Initial Cost = $450,000, Annual Op. Cost = $60,000, Annual Benefits = $265,000, Annual Disbenefits = $150,000, Life = 10 years

Option Y: Initial Cost = $850,000, Annual Op. Cost = $30,000, Annual Benefits = $325,000, Annual Disbenefits = $97,500, Life = 20 years

i = 8%

Solutions:

a.) Choose Option Y

b.) Choose Option X

c.) Tell your boss to do nothing as both are poor investments

d.) You have no idea what to tell your boss