he government of Botswana has commissioned a Gaborone Dam Project Besides using the water domestic purposes, the water will also be used for generation of hydro-electric power, provision of flood control, irrigation, and recreation benefits. The estimated benefits and costs expected from the two alternatives under consideration are listed in the following table Initial Cost Operating and Maintenance Project A (BWP) 350,000.00 35.000.00 Project B (BWP) 250,000.00 30.000.00
he government of Botswana has commissioned a Gaborone Dam Project Besides using the water domestic purposes, the water will also be used for generation of hydro-electric power, provision of flood control, irrigation, and recreation benefits. The estimated benefits and costs expected from the two alternatives under consideration are listed in the following table Initial Cost Operating and Maintenance Project A (BWP) 350,000.00 35.000.00 Project B (BWP) 250,000.00 30.000.00
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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Transcribed Image Text:8. The government of Botswana has commissioned a Gaborone Dam Project
Besides using the water domestic purposes, the water will also be used for generation
of hydro-electric power, provision of flood control, irrigation, and recreation benefits.
The estimated benefits and costs expected from the two alternatives under
consideration are listed in the following table
Initial Cost
Operating and Maintenance
Costs
Power sales/year
Flood control savings
Irrigation benefits
Recreation benefits
Project A (BWP)
350,000.00
35,000.00
20,000.00
45,000.00
55,000.00
30,000.00
Project B (BWP)
250,000.00
30,000.00
30.000.00
35,000.00
45 000 00
20.000.00
Which of the two projects should be accepted if the interest rate is 18% and the life
of the project is 50 years?
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