Question:

8. A dam is proposed on a stretch of wild river, a river that is currently used for recreation. The dam will generate electricity for 50 years after which the reservoir will be filled with sediment and the dam will need to be removed. The follow are the characteristics of the dam: ... [Rest of the question is in the picture BELOW]!

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8. A dam is proposed on a stretch of wild river, a river that is currently used for recreation. The dam will generate electricity for 50 years after which the reservoir will be lled with sediment an the dam will need to be removed. The following are the characteristics of the dam: o $100M initial cost 0 Electricity produced 100,000MWH/ year @ $100/MWH 0 Cost of decommissioning the dam: $10M 0 Value of recreation loss: $5M/ year (a) Is the dam good idea if the social discount rate is 2%? (b) Is the dam good idea if the social discount rate is 10%? (c) What is the IRR. from this dam? [Once you write down the equation that you would solve, you can use computer to solve for this. Here is an online resource: https://www.thecalculatorsite . com/ finance/calculators/irr calculator . php]