The State Legislative Budget Board approved adding 4000 surveillance cameras along the 800-mile Texas-Mexico border from El Paso to Brownsville at a cost of $300 per camera. In addition to the cost of the cameras, manpower and other resources are expected to cost $3.2 million per year. The benefits associated with interception of people and drugs are estimated to be $5.1 million per year. What is the conventional B/C ratio at an interest rate of 6% per year over a 10-year project period?
What will be an ideal response?
C = 4000(300)(A/P,6%,10) + 3,200,000
= 4000(300)(0.13587) + 3,200,000
= $3,363,044 per year
B/C = 5,100,000/3,363,044
= 1.52
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