3. Problem 3 The provincial government proposes to construct a multi-purpose water project to provide water for irrigation and municipal use. In addition, there are flood control and recreation benefits. The benefits are given in table below. 4 Irrigation 35 Annual benefits ($1,000s/yr) during: Purpose Years 1-10 Years 11-20 Years 21-30 Years 31-40 Years 41-50 30 2 8 Flood control Rectreation Totals The operation and maintenance cost is $25,000 per year. Assume a 50-year analysis period with no net project salvage value. a) If the government can borrow money at an interest rate of 3.8%, what capital expenditure can be justified to build the water project now? In other words, what is the capital expenditure that will result in a benefit-cost ratio of 1? Use benefit-cost ratio analysis for this. b) If the government borrowing interest rate changes to 7%, what would the revised justifiable capital expenditure be? c) Why did it change