One of two alternatives will be selected to reduce flood damage in a rural community in central Arizona. The estimates associated with each alternative are available. Use B/C analysis at a discount...

One of two alternatives will be selected to reduce

flood damage in a rural community in central

Arizona. The estimates associated with each alternative

are available. Use B/C analysis at a discount rate

of 8% per year over a 20-year study period to determine

which alternative should be selected. For analysis

purposes only, assume the flood damage would

be prevented in years 3, 9, and 18 of the study period.

Retention Pond Channel

Initial cost, $ 880,000 2,900,000

Annual maintenance, $/year 92,000 30,000

Reduced flood damage, $ 200,000 600,000