Construction of a flood control dike having a life span

Reference no: EM13683617

A state government is considering construction of a flood control dike having a life span of 15 years. History indicates that a flood occurs every five years, on average, and causes $600,000 in damages on each occasion. If the state utilizes a MARR of 10% per year and expects every public works project to have a benefit-cost ratio of at least 1.0, what is the maximum investment (to the nearest whole dollar) that will be allowed for the dike?

Reference no: EM13683617

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