1. The City of Ft. Myers is considering three mutually exclusive designs for enh
ID: 2619379 • Letter: 1
Question
1. The City of Ft. Myers is considering three mutually exclusive designs for enhancing the capacity of a canal to reduce flooding. The interest rate is 6% and the project is designed to last for 25 years. Using incremental benefit-cost analysis what is the incremental B/C ratio for the first pair when ordering the alternatives in order of increasing investment? Ans. x.xx What is the B/C ratio for th second pair? Ans x.xx Based on the analysis which alternative would you select? Ans. x A B C Investment. $ $ (120,000) $ (140,000) $ (150,000) Benefits, $/year $ 87,000 $ 91,000 $ 96,000 O&M, $/year $ (46,000) $ (49,500) $ (52,300) SV, $ $ 23,000 $ 29,000 $ 31,500 CR $/year $ 8,968 $ 10,423 $ 11,160
Explanation / Answer
Hi,
The data provided to solve the question is insufficient, having said that I have understood your question and let me provide you with the hint using which you can alone solve such type of questions !!! :)
So Incremental B/C is nothing but incremental cost benefit ratio.
The very word incremental means extra - consider 3 competitors and 3 rounds just as an example.
Competitor 1 2 3
Paper 1 60 75 55
Paper 2 84 56 70
Paper 3 59 44 88
Suppose 3 of them are students and you are asked to select one of them and no one influences the performance of another ie. they are independent so what will you do ?
Think abt it . take least marks of paper 1 subtract from all the others so you find how much extra a person scores in paper 1 also you will see the cost associated with it, for eg if you had to give every chocolates (the cost) you will also take the incremental of it. And compare extra marks to extra chocolates or just simply Marks to Chocolate !!!!
I hope from concept point of view this helps.
Thinks about it.
Keep Chegging and smiling.
Regards,
Team Chegg :)
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