A river that passes through private lands is formed from four branches of water

Question

A river that passes through private lands is formed from four branches of water that flow from a National forest. Some flooding occurs each year, and a major flood generally occure every few years. If small earthen dams are placed on each of the four branches, then the chances of major flooding would be practically eliminated. construction of one or more dams would reduce the amount of flooding by varying defrees or amounts. Other potential benefits of the dames would be the reduction of damage to fire and logging road in the forest, the value of dammed water for protection against forest fires, and an increased recreational use. The equation used to calculate B/C ratios is: B/C = annual flood & fire savings + recreational benefits/equivalent annual construction costs + maintenance Benefits & costes are to be compared by using B/C analysis equivalents, with an interest rate of 8%, and useful lives of 100 year for the dams. which of the four options is recommended? A(dam site 1) B(dam site 1 & 2) C(dam sites 1,2, & 3) D(dam sites 1, 2, 3 & 4)

Explanation / Answer

1 is best.

Equivalent annual construction cost is equal to depreciation (Cost/100 years) and interest of 8% flat on construction cost.

Cost Annual Benefits Construcion Annual Maintenance Flood Fire Recreaion Total            1.00 3,120,000.00        52,000.00 520,000.00     52,000.00     78,000.00      650,000.00 1,2 3,900,000.00        91,000.00 630,000.00 104,000.00     78,000.00      812,000.00 1,2,3 7,020,000.00      130,000.00 728,000.00 156,000.00 156,000.00 1,040,000.00 1,2,3,4 9,100,000.00      156,000.00 780,000.00 182,000.00 182,000.00 1,144,000.00 B/C Annual flood & fire saving+Recretional Benefits Equilent annual construction cost+maintennce      650,000.00              1.95      332,800.00      812,000.00              1.84      442,000.00 1,040,000.00              1.37      761,800.00 1,144,000.00              1.17      975,000.00

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