A local government's plan to build a flood canal at a cost of Rp50 trillion this year raises pros and cons. It is estimated that this canal flood can prevent losses of Rp. 400 trillion due to flooding in the area. For the record, the benefits of canal flooding will only be felt 50 years from now. The critics of this policy suggest that instead of building flood canals, the government should invest Rp50 trillion in these funds with an average real rate of return of 5 percent per year. According to critics, after 50 years the government can use the accumulated investment profits to pay for the losses caused by the floods. Do you agree with government critics?
A local government's plan to build a flood canal at a cost of Rp50 trillion this year raises pros and cons. It is estimated that this canal flood can prevent losses of Rp. 400 trillion due to flooding in the area. For the record, the benefits of canal flooding will only be felt 50 years from now. The critics of this policy suggest that instead of building flood canals, the government should invest Rp50 trillion in these funds with an average real rate of return of 5 percent per year. According to critics, after 50 years the government can use the accumulated investment profits to pay for the losses caused by the floods. Do you agree with government critics?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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A local government's plan to build a flood canal at a cost of Rp50 trillion this year raises pros and cons. It is estimated that this canal flood can prevent losses of Rp. 400 trillion due to flooding in the area. For the record, the benefits of canal flooding will only be felt 50 years from now. The critics of this policy suggest that instead of building flood canals, the government should invest Rp50 trillion in these funds with an average real
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