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Please explain thoughts A township has $5,000,000 available to spend on flood-control projects. Project A is expected to generate flood prevention benefits of $460,000 per
Please explain thoughts A township has $5,000,000 available to spend on flood-control projects. Project A is expected to generate flood prevention benefits of $460,000 per year for an investment of $3,000,000 and annual expenses of $57,000. Project B, costing $4,000,000 with maintenance expenses of $81,500 per year is expected to produce annual savings of $613,000 due to reduced flooding. Both projects have an expected life span of 40 years. For an interest rate of 10%, due a benefit -cost analysis for each project and then perform an incremental benefit-cost analysis. Which project do you recommend (if any) and why? (20 points) 3
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