Exercise 5 An area on Nahr Ibrahim River is subject to periodic flood damage that occurs, on the average, every year and results in a $ 2,000,000 loss. It has been proposed that the river channel should be straightened and deepened, at a cost of $ 2,500,000, to reduce the probable damage to $ 1,600,000 for each occurrence during a period of 20 years before it would have to be deepened again. This procedure would also involve annual expenditures of $ 80,000 for minimal maintenance. Municipality in the area has proposed that a better solution would be to construct a flood-control dam at a cost of $ 8,500,000, which would last indefinitely, with annual maintenance costs of $ 50,000. The municipality estimates that this project would reduce the probable annual flood damage to $ 450,000. In addition, this solution would provide a substantial amount of irrigation water that would produce annual revenue of $ 175,000 and recreational facilities, which it estimates would be worth $ 45,000 per year to the adjacent villages. The Council of Development and Reconstruction believes that the dam should be built and that the river channel also should be straightened and deepened (both solutions applied), noting that this would reduce the probable annual flood loss to $ 350,000, while providing the same irrigation and recreational benefits. If the municipality's uses an interest rate of 10%/year, which project should it select based on benefit to cost analysis