Part Three A dyke is proposed to be constructed for river protection of a city against flooding. The higher the dyke, the greater the costs and the lower the risk of flooding. Estimated data are indicated in the following Table: Height of Dyke (m) Cost of Dyke (€ million) Risk of Flooding (times per year) 3 15 2.5 3.5 22 1.5 38 1.2 5.5 87 0.8 6.5 110 0.4 8 130 0.2 If the damage by flooding is estimated at £15.4m each time it occurs, determine the design height that should be selected if money can be borrowed at 9% cost of capital.

Part Three A dyke is proposed to be constructed for river protection of a city against flooding. The higher the dyke, the greater the costs and the lower the risk of flooding. Estimated data are indicated in the following Table: Height of Dyke (m) Cost of Dyke (€ million) Risk of Flooding (times per year) 3 15 2.5 3.5 22 1.5 38 1.2 5.5 87 0.8 6.5 110 0.4 8 130 0.2 If the damage by flooding is estimated at £15.4m each time it occurs, determine the design height that should be selected if money can be borrowed at 9% cost of capital.

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter17: Long-term Investment Analysis

Section: Chapter Questions

Problem 10E

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