Question: A council is considering how to spend its limited funds. It is has two streets that often suffer from flooding, and is considering installing larger storm drains in one or both of them. Replacing the drains in Street A has a capital cost of $500,000 and a life of 12 years. Reduction in flooding will have a value of $50,000 per year. At the end of 12 years the drains will need to be replaced, but some of the works can be reused in the future project up to a value of $250,000. The project's discount rate is 15%. What is the Benefit Cost Ratio for replacing the drains in Street A? (Answer to two decimal places) Replacing the drains in Street B has a capital cost of $1,170,000 and a life of 18 years. Reduction in flooding will have a value of $100,000 per year. At the end of 18 years the drains will need to be replaced, but some of the works can be reused in the future project up to a value of $400,000. The project's discount rate is 12%. What is the Benefit Cost Ratio for Project B? (Answer to two decimal places)

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