Alternative A. Build a coal-powered generating facility at a cost of $20,000,000. Annual power sales are expected to be $1,000,000 per year. Annual operating and maintenance costs are $200,000 per year. A benefit of this alternative is that it is expected to attract new industry, worth $500,000 per year, to the region. Alternative B. Build a hydroelectric generating facility. The capital investment, power sales, and operating costs are $30,000,000, $800,000, and $100,000 per year, respectively. Annual benefits of this alternative are as follows: Flood-control savings Irrigation Recreation Ability to attract new industry 600, 000 200, 000 100, 000 400, 000
Alternative A. Build a coal-powered generating facility at a cost of $20,000,000. Annual power sales are expected to be $1,000,000 per year. Annual operating and maintenance costs are $200,000 per year. A benefit of this alternative is that it is expected to attract new industry, worth $500,000 per year, to the region. Alternative B. Build a hydroelectric generating facility. The capital investment, power sales, and operating costs are $30,000,000, $800,000, and $100,000 per year, respectively. Annual benefits of this alternative are as follows: Flood-control savings Irrigation Recreation Ability to attract new industry 600, 000 200, 000 100, 000 400, 000
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question
Economics
Direction: Determine the benefits, costs & disbenefits of the following situations.
Transcribed Image Text:Alternative A. Build a coal-powered generating facility at a cost of $20,000,000. Annual power sales
are expected to be $1,000,000 per year. Annual operating and maintenance costs are $200,000 per
year. A benefit of this alternative is that it is expected to attract new industry, worth $500,000 per
year, to the region.
Alternative B. Build a hydroelectric generating facility. The capital investment, power sales, and
operating costs are $30,000,000, $800,000, and $100,000 per year, respectively. Annual benefits of
this alternative are as follows:
Flood-control savings
Irrigation
Recreation
Ability to attract new industry
600, 000
200, 000
100, 000
400, 000
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