High-risk intersections to reduce traffic accident

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The City of Vernon, TX is considering installing red light cameras at high-risk intersections to reduce traffic accidents. The life of the cameras would be 10 years. The cost of maintaining the cameras is $16,000 the first year, and then increasing every year by a constant amount of $2, 500. Public benefits are estimated at $100,000 per year. What would the MAXIMUM initial investment cost of the cameras (its present worth at t = 0) in order for this project to be justified, using a rate of 10%? Remember that justification is based on a minimum conventional B/C ratio of 1.0 ______________.

Reference no: EM131536475

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