A state government is considering construciton of a floodcontrol dike having a l

Question

A state government is considering construciton of a floodcontrol dike having a lifespan of 15 years.  Historyindicates that a flood occurs every five years and causes sixhundred thousand dollars in damages, on average. If the stateuses a MARR of 12% per year and expects every publics works projectto have a B-C ratio of at least 1.0, what is the maximum investmentthat will be allowed for the dike? Assume that the floodoccurs in the middle of each five year period. A. $1,441,000 B. $643,000 C. $843,000 D. $4,087,000 E. $1,800,000 A state government is considering construciton of a floodcontrol dike having a lifespan of 15 years.  Historyindicates that a flood occurs every five years and causes sixhundred thousand dollars in damages, on average. If the stateuses a MARR of 12% per year and expects every publics works projectto have a B-C ratio of at least 1.0, what is the maximum investmentthat will be allowed for the dike? Assume that the floodoccurs in the middle of each five year period. A. $1,441,000 B. $643,000 C. $843,000 D. $4,087,000 E. $1,800,000

Explanation / Answer

D. $4,087,000

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