The B/C ratio for a mosquito control program pro­posed by the Harris County Department of Health is reported to be 2.1. The person who prepared the report stated that the annual health benefits were estimated to be $400,000, and that disbenefits of $25,000 per year were used in the calculation. He also stated that the costs for chemicals, machinery, maintenance, and labor were estimated at $150,000 per year, but he forgot to list the cost for initiating the program (trucks, pumps, tanks, etc.). If the ini­tial cost was amortized over a 10-year period at 8% per year, what is the estimated initial cost?

What will be an ideal response?


C = P(A/P,8%,10) + 150,000
= P(0.14903) + 150,000

B - D = 400,000 – 25,000

B/C = (400,000 – 25,000)/[P(0.14903) + 150,000]
2.1 = 375,000/[P(0.14903) + 150,000]
2.1[P(0.14903) + 150,000] = 375,000
P = $191,716

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