Discussion
A flood control scheme costs 40 million and averts damage with a present worth of 52 million, while displacing residents at a present worth cost of 6 million. Its conventional ratio is
Answer: D
Correct answer: 1.15
\[ \frac{52 - 6}{40} = \frac{46}{40} = 1.15. \] The displacement of residents is a disbenefit - a loss falling on the public rather than an expenditure by the agency - so under the conventional form it is subtracted in the numerator, not added to the 40 million below.
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