The U.S. Department of Interior is planning to build a dam and construct a hydroelectric power plant. In addition to producing electric power, this project will provide flood control, irrigation, and recreational benefits. The estimated benefits and costs expected to be derived from the three alternatives under consideration are listed as follows in the table below. The interest rate is 5%, and the life of each project is estimated to be 40 years. OLL

ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
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Chapter1: Making Economics Decisions
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Initial investment
Annual recurring benefits
Annual recurring costs
Salvage value
A
$100 M
$20 M
$8 M
0
Design Alternatives
B
$160 M
$40 M
$18 M
0
C
$220 M
$60 M
$25 M
0
Transcribed Image Text:Initial investment Annual recurring benefits Annual recurring costs Salvage value A $100 M $20 M $8 M 0 Design Alternatives B $160 M $40 M $18 M 0 C $220 M $60 M $25 M 0
The U.S. Department of Interior is planning to build a dam and construct a hydroelectric power plant. In addition to
producing electric power, this project will provide flood control, irrigation, and recreational benefits. The estimated
benefits and costs expected to be derived from the three alternatives under consideration are listed as follows in the
table below. The interest rate is 5%, and the life of each project is estimated to be 40 years.
Click the icon to view the data for the three alternatives.
Click the icon to view the interest factors for discrete compounding when i = 5% per year.
(a) Find the benefit-cost ratio for each alternative. Fill in the table below. (Round to two decimal places.)
Design Alternatives
A
B
A. Project A
B. Project B
OC. Project C
с
BC(1)
(b) Select the best alternative, according to BC(i). Fill in the table below. (Round to two decimal places.)
Incremental
Investment
BC(1) k-j
B-A
C-B
Which design alternative would be the best one according to BC(i)? Choose the correct answer below.
Transcribed Image Text:The U.S. Department of Interior is planning to build a dam and construct a hydroelectric power plant. In addition to producing electric power, this project will provide flood control, irrigation, and recreational benefits. The estimated benefits and costs expected to be derived from the three alternatives under consideration are listed as follows in the table below. The interest rate is 5%, and the life of each project is estimated to be 40 years. Click the icon to view the data for the three alternatives. Click the icon to view the interest factors for discrete compounding when i = 5% per year. (a) Find the benefit-cost ratio for each alternative. Fill in the table below. (Round to two decimal places.) Design Alternatives A B A. Project A B. Project B OC. Project C с BC(1) (b) Select the best alternative, according to BC(i). Fill in the table below. (Round to two decimal places.) Incremental Investment BC(1) k-j B-A C-B Which design alternative would be the best one according to BC(i)? Choose the correct answer below.
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