Near the state capitol, a heritage center houses historical artifacts of significance to the state dating from pre-statehood to the present. The center is particularly well done and serves as both a historical research facility and as simply an enjoyable place for families and guests to visit. A survey has determined that annual benefits of \(\$ 3\) each are now received by 12,000 visitors, \(\$ 5\) each by 14,000 visitors, \(\$ 7\) each by 6,000 visitors, and \(\$ 10\) each by 9,000 more visitors. The annualized cost of the heritage center is \(\$ 250,000\), considering investment, operations, and maintenance. It is proposed to charge \(\$ 5.75\), just under the average benefit received per visitor. Their analysis does explicitly recognize that there will be a disbenefit of \(\$ 2.75\) to 12,000 visitors and \(\$ 0.75\) to 14,000 more. The resulting \(B / C\) ratio is calculated as follows:

The proponents of charging admission point to the huge \(B / C\) ratio, as well as the fact that nearly all of the annualized cost would be covered each year.

a. Identify any problems or concerns with this analysis.

b. Prepare your own \(B / C\) analysis if you believe this to be incorrect.

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BIC= == $10(9,000) + $7(6,000) + $5(14,000) + $3(12,000) $0.75 (14,000) - $2.75(12,000) $250,000 $5.75(41,000) = = 13.65