A hydroelectric dam is projected to produce annual benefits that grow in concert with the regional economic growth rate of 2%. The first benefit amount, $600,000, occurs at the end of year 5 (after the dam is constructed and the reservoir fills). If the interest rate is 8% and the benefits are assumed to continue growing through year 50 (50-year planning period), what is the present value of benefits (at t = 0)?`
A hydroelectric dam is projected to produce annual benefits that grow in concert with the regional economic growth rate of 2%. The first benefit amount, $600,000, occurs at the end of year 5 (after the dam is constructed and the reservoir fills). If the interest rate is 8% and the benefits are assumed to continue growing through year 50 (50-year planning period), what is the present value of benefits (at t = 0)?`
Chapter9: Capital Budgeting Techniques
Section: Chapter Questions
Problem 11PROB
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A hydroelectric dam is projected to produce annual benefits that grow in concert with the
regional economic growth rate of 2%. The first benefit amount, $600,000, occurs at the
end of year 5 (after the dam is constructed and the reservoir fills). If the interest rate is 8%
and the benefits are assumed to continue growing through year 50 (50-year planning
period), what is the present value of benefits (at t = 0)?`
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