QUESTION NO.13 Two relatively inexpensive alternatives are available to reduce potential earthquake damage at a top secret government research site. The cash flow estimates for each alternative are shown. At an interest rate of 8% per year and a 20-year study period, apply the B/C ratio method to select an alternative. Assume the damage costs would occur in the middle of the study period, that is, year 10. Alternative 1 Alternative 2 Initial cost, $ 600,000 1,100,000 Annual maintenance, S per year 50,000 90,000 Potential damage costs, $ 950,000 350,000 A. AB/C= 0.31 Select Alternative 1 C. AB/C = 0.41 Select Alternative 1 E. No correct answer B. AB/C = 0.31 Select Alternative 2 D. AB/C = 0.41 Select Alternative 2

QUESTION NO.13 Two relatively inexpensive alternatives are available to reduce potential earthquake damage at a top secret government research site. The cash flow estimates for each alternative are shown. At an interest rate of 8% per year and a 20-year study period, apply the B/C ratio method to select an alternative. Assume the damage costs would occur in the middle of the study period, that is, year 10. Alternative 1 Alternative 2 Initial cost, $ 600,000 1,100,000 Annual maintenance, S per year 50,000 90,000 Potential damage costs, $ 950,000 350,000 A. AB/C= 0.31 Select Alternative 1 C. AB/C = 0.41 Select Alternative 1 E. No correct answer B. AB/C = 0.31 Select Alternative 2 D. AB/C = 0.41 Select Alternative 2

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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