A potential site for a reservoir is being evaluated for two mutually exclusive options: a small water supply reservoir, or a large flood control reservoir. Data on the two options are shown. Interest rate to be used is 8%, and the lifetime of both options is 50 years.
| Water Supply ($ million) | Flood Control ($ million) |
Initial cost | 50.0 | 95.0 |
Annual operating cost | 0.5 | 0.5 |
Annual benefit | 9.012.0 |
|
(a) Show the cash flow table, using the correct sign convention for all entries including the incremental column.
(b) Solve by the present worth method.
(c) Solve by the annual cash flow method.
(d) Solve bb the incremental benefit-cost ratio method
(e) Solve by the incremental rate of return method, assuming dial each project is economically
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