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In 2006/2007, the government of Ghana in response to the energy crisis commissioned the construction of a power dam at Bui in the Western region

  1. In 2006/2007, the government of Ghana in response to the energy crisis commissioned the construction of a power dam at Bui in the Western region to complement power supply in the country. The table below shows the flow of real benefits (i.e. direct and indirect) and real cost (i.e. direct and indirect) associated with the project for the next ten (10) years.

Year

0

1

2

3

4

5

6

7

8

9

benefit

300

450

580

630

1000

1200

2000

2100

4000

Cost

3000

2500

1800

1000

500

350

300

280

230

150

  1. Using a discount rate of 5 percent, compute the net present value of the project.
  2. Comment on the viability of the project

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