Incremental B/C Analysis of Multiple Exclusive Alternatives
Source: Blank And Tarquin, Engineering Economy, pp. 317-319.

The Economic Development Corporation (EDC) for the city of Bahia, California, and Moderna County is operated as a not-for-profit corporation. It is seeking a developer that will place a major water park in the city or county area. Financial incentives will be awarded. In response to a request for proposal (RFP) to the major water park developers in the country, four proposals have been received. Larger and more intricate water rides and increased size of the park will attract more customers, thus different levels of initial incentives are requested in the proposals. One of these proposals will be accepted by the EDC and recommended to the Bahia City Council and Moderna County Board of Trustees for approval.  Approved and in-place economic incentive guidelines allow entertainment industry prospects to receive up to $500,000 cash as a first-year incentive award and 10% of this amount each year for 8 years in property tax reduction. All the proposals meet the requirements for these two incentives. Each proposal includes a provision that residents of the city or county will benefit from reduced entrance (usage) fees when using the park. This fee reduction will be in effect as long as the property tax reduction incentive continues. The EDC has estimated the annual total entrance fees with the reduction included for local residents.  Also, EDC estimated the extra sales tax revenue expected for the four park designs. These estimates and the costs for the initial incentive and annual 10% tax reduction are summarized in the following table

Estiniates of Costs and Benefits, and the Incremental B/C Analysis 6 Four Water Park Proposals.

Solution