The government is planning a hydroelectric project for a river basin. In addition to the production of electric power, this project will provide flood control, irrigation and recreation benefits. The estimated benefits and costs that are expected to be derived from this project are listed below. Initial cost = 180,000,000 Annual power sales = 12,000,000 Annual flood control savings = # 5,000,000 Annual irrigation benefits = 8,000,000 Annual recreation benefits = 4,000,000 Annual operating and maintenance costs = 5,000,000 Life of the project = 40 years Required: Check whether the government should implement the project (assume i = 15%).
The government is planning a hydroelectric project for a river basin. In addition to the production of electric power, this project will provide flood control, irrigation and recreation benefits. The estimated benefits and costs that are expected to be derived from this project are listed below. Initial cost = 180,000,000 Annual power sales = 12,000,000 Annual flood control savings = # 5,000,000 Annual irrigation benefits = 8,000,000 Annual recreation benefits = 4,000,000 Annual operating and maintenance costs = 5,000,000 Life of the project = 40 years Required: Check whether the government should implement the project (assume i = 15%).
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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