Several alternatives are under consideration to enhance security at a county jail. Since the alternatives serve different areas of the facility, all that are economically attractive will be implemented. Determine which one(s) should be selected, based on a B/C analysis using an interest rate of 7% per year and a 10-year study period.
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Compare all alternatives against DN using AW values
EC vs. DN: B = $110,000 per year
D = $26,000 per year
C = 38,000(A/P,7%,10) + 49,000
= 38,000(0.14238) + 49,000
= $54,410 per year
(B-D)/C = (110,000 – 26,000)/54,410
= 1.54 EC is acceptable
NS vs. DN: B = $160,000 per year
D = $21,000 per year
C = 87,000(A/P,7%,10) + 64,000
= 87,000(0.14238) + 64,000
= $76,387 per year
(B-D)/C = (160,000 – 21,000)/76,387
= 1.82 NS is acceptable
ST vs. DN: B = $74,000 per year
D = $32,000 per year
C = 99,000(A/P,7%,10) + 42,000
= 99,000(0.14238) + 42,000
= $56,095 per year
(B-D)/C = (74,000 – 32,000)/56,095
= 0.75 ST is not acceptable
AC vs. DN: B = $52,000 per year
D = $14,000 per year
C = 61,000(A/P,7%,10) + 36,000
= 61,000(0.14238) + 38,000
= $46,685 per year
(B-D)/C = (52,000 – 14,000)/46,685
= 0.81 AC is not acceptable
Select EC and NS
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