Engineering Economic Analysis

Benefit-Cost Ratio Analysis 279

Continuous Alternatives

At times the feasible alternativesare a continuous function. When we considered the height

of a dam in Chapter 8 (Example 8-9), we found that it was possible to build the dam

anywhere from 200 to 500 feet high.

In many situations, the projected capacity of an industrial plant can be varied contin-

uously over some feasible range. In these cases, we seek to add increments of investmel).t

where/1Bj/1C 2: 1 and avoid increments where/1Bj/1C < 1. The optimal size of such a

project is where /1Bj/1C=1. Figure 9-2a shows the line of feasible alternatives with their

Maximum Present Worth

",of Benefits Obtainable at

Each Level of Cost

.I

rIC=O.5

o

I

'H'. '"_~+.. _ _.' '-. ~." .~.n<_,,_._.

I Present Worth of CostI

II (a)

II

I--I OptimalValuefor

I PW of Cost

I

I

I

I

Present Worth of Cost

(b)

Present Worth of Cost

(c)

FIGURE9-2 Selecting optimal size of project: (a) feasible alternatives, (b) changes in ~B/~C, and
(c) total NPW plotted versus size of the project.

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