A state-funded water irrigation project in the province of Davao del Sur for the rice farmers will cost $50,000 as per the winning contractor during the public bidding. The benefits that can be generated at the end of the first year are estimated to be $10,000, increasing at a 10% uniform rate in subsequent years. While the annual operating and maintenance costs is estimated to be $2,000. Using an 8-year study period and a 10% interest rate, determine whether the project is economically attractive utilizing the B/C analysis using Present Worth: a. Conventional b. Modified

A state-funded water irrigation project in the province of Davao del Sur for the rice farmers will cost $50,000 as per the winning contractor during the public bidding. The benefits that can be generated at the end of the first year are estimated to be $10,000, increasing at a 10% uniform rate in subsequent years. While the annual operating and maintenance costs is estimated to be $2,000. Using an 8-year study period and a 10% interest rate, determine whether the project is economically attractive utilizing the B/C analysis using Present Worth: a. Conventional b. Modified

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter5: Investment Decisions: Look Ahead And Reason Back

Section: Chapter Questions

Problem 5.4IP

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