Two relatively inexpensive alternatives are available for reducing potential earthquake damage at a top secret government research site. The cash flow estimates for each alternative are given below. At an interest rate of 8% per year, use the B/C ratio method to determine which one should be selected.

Use a 20-year study period, and assume the damage costs would occur in the middle of the study period, that is, in year 10.

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Alternative 1 Alternative 2 Initial cost, $ 600,000 1,100,000 Annual maintenance, $/year Potential damage costs, $ 70,000 50,000 950,000 250,000