(Adapted from WRE-Linsley 13.6) Ten water-resources projects are under consideration for funding. The estimated annual costs and annual benefits for the parts are shown below.
| Average | Average | |
| Annual | Annual | |
|
Project |
Costs | Benefits |
| A | $ 65,000 | $ 78,000 |
| B | $ 52,000 | $ 59,000 |
| C | $ 27,000 | $ 39,000 |
| D | $ 59,000 | $ 91,000 |
| E | $ 105,000 | $ 118,000 |
| F | $ 68,000 | $ 90,000 |
| G | $ 40,000 | $ 61,000 |
| H | $ 71,000 | $ 70,000 |
| I | $ 39,000 | $ 52,000 |
| J | $ 70,000 | $ 81,000 |
Compute the benefit-cost ratio and the net benefits for each project. Which projects should be built if budgetary limitations restrict the annual costs to: (a) $75,000; (b) $200,000; and (c) $300,000? [That is, do as many of the projects as possible given the budgetary limits.]
[HINT: Pick projects that have a high rate of return and maximize net benefits.]