Juba city council is considering to construct a sewage management system, the construction of this system will take 3 years before commissioning. the initial capital outlay is estimated to be $10m after commissioning, the juba city council will incur an annual operation and maintenance cost in the amount of $500,000. the sewage management system will generate an annual benefit of $ 2.5m. the sewage management system will have useful life of 27 years. the city council use 5% discount rate to appraise public project. Required. 1- compute the present value of the cost and benefits? 2-perform cost benefit analysis to determine whether the project should be undertaken by the City council? 3-Assume you are consulted on this project, advice the city council on how to governed the project. 4- In addition to monetary conditions, what are the other factors to be considered in deciding whether or not the project would be taken?
Juba city council is considering to construct a sewage management system, the construction of this system will take 3 years before commissioning. the initial capital outlay is estimated to be $10m after commissioning, the juba city council will incur an annual operation and maintenance cost in the amount of $500,000. the sewage management system will generate an annual benefit of $ 2.5m.
the sewage management system will have useful life of 27 years. the city council use 5% discount rate to appraise public project.
Required.
1- compute the present value of the cost and benefits?
2-perform cost benefit analysis to determine whether the project should be undertaken by the City council?
3-Assume you are consulted on this project, advice the city council on how to governed the project.
4- In addition to monetary conditions, what are the other factors to be considered in deciding whether or not the project would be taken?
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