Question
A state government is planning a hydroelectric project for a river basin. In addition to the production of electric power, this project will provide flood
A state 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 = Rs. 18,00,00,000
Annual power sales = Rs. 1,20,00,000
Annual flood control savings = Rs. 50,00,000
Annual irrigation benefits = Rs. 80,00,000
Annual recreation benefits = Rs. 40,00,000
Annual operating and maintenance costs = Rs. 50,00,000
Life of the project = 40 years
Check whether the state government should implement the project (assumei = 15%)
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