): A county is considering three locations for a new dam. The three alternatives for the dams for the three locations cost $25,000,000, $30,000,000, and $32,000,000. Currently flood damage amounts to $20,000,000 per year, If the new dams are built, the flood damage will be reduced to $17,000,000; $16,000,000; and $15,500,000 per year, respectively. Determine which dam should be built based on the incremental benefit/cost ratios using an interest rate of 5% per year and a life of 10 years. (Hint: the benefits are the reduced damage of new dams comparing with the old ones)

): A county is considering three locations for a new dam. The three alternatives for the dams for the three locations cost $25,000,000, $30,000,000, and $32,000,000. Currently flood damage amounts to $20,000,000 per year, If the new dams are built, the flood damage will be reduced to $17,000,000; $16,000,000; and $15,500,000 per year, respectively. Determine which dam should be built based on the incremental benefit/cost ratios using an interest rate of 5% per year and a life of 10 years. (Hint: the benefits are the reduced damage of new dams comparing with the old ones)

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Contract Costing

Contract costing is about tracing particular costs related to a particular contract entered into with the customer. It is one of the forms of job order costing. It is useful in long-term contracts at the most. It is seen that substantial time is required for the completion of the contract which takes different accounting periods. Thus, it is very much helpful for recognizing the costs associated with it and accounting in their specific accounting periods.

Question

J: A county is considering three locations for a new dam. The three alternatives for
the dams for the three locațions cost $25.000.000, $30,000,000, and $32,000,000. Currently flood
damage amounts to $20,000,000 per year, If the new dams are built, the flood damage will be reduced
to $17,000,000; $16,000,000; and $15,500,000 per year, respectively. Determine which dam should be
built based on the incremental benefit/cost ratios using an interest rate of 5% per year and a life of 10
years. (Hint: the benefits are the reduced damage of new dams comparing with the old ones)

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