A new storm drainage system must be constructed right away to reduce periodic flooding that occurs in a city that is in a valley. Five mutually exclusive designs have been proposed, and their present worth (in thousands of dollars) of costs and benefits are the following. System 1 2 3 4 5PW of cost $1000 $4000 $4000 $10,000 $14,000PW of benefits $8000 $8000 $14,000 $16,000 $24,000Which sytem has the greatest B-C ratio?

Question

Aidan

Business

1 October, 18:31

A new storm drainage system must be constructed right away to reduce periodic flooding that occurs in a city that is in a valley. Five mutually exclusive designs have been proposed, and their present worth (in thousands of dollars) of costs and benefits are the following. System 1 2 3 4 5PW of cost $1000 $4000 $4000 $10,000 $14,000PW of benefits $8000 $8000 $14,000 $16,000 $24,000Which sytem has the greatest B-C ratio?

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Diego Ho · Answer 1

Design 1

Explanation:

Benefit-Cost ratio is used to determine the net benefit pre dollar invested in a project.

Benefit-Cost ratio formula = PW of benefits / PW of cost

Design 1; 8000/1000 = 8

Design 2; 8000/4000 = 2

Design 3; 14000/4000 = 3.5

Design 4; 16000/10000 = 1.6

Design 5; 24000/14000 = 1.7

Therefore, from the above calculations, design 1 has the greatest Benefit-Cost ratio.