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%).

ENGR.ECONOMIC ANALYSIS
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Chapter1: Making Economics Decisions
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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 = P 180,000,000
Annual power sales = P 12,000,000
Annual flood control savings = P 5,000,000
Annual irrigation benefits = P 8,000,000
Annual recreation benefits = 4,000,000
Annual operating and maintenance costs = P 5,000,000
Life of the project = 40
years
Required:
Check whether the government should implement the project
(assume i = 15%).
Transcribed Image Text: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 = P 180,000,000 Annual power sales = P 12,000,000 Annual flood control savings = P 5,000,000 Annual irrigation benefits = P 8,000,000 Annual recreation benefits = 4,000,000 Annual operating and maintenance costs = P 5,000,000 Life of the project = 40 years Required: Check whether the government should implement the project (assume i = 15%).
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