The city of Doonsey is planning a large dam project. As part of its financing, the city has submitted an application to the World Bank. You have been asked to make recommendations to the World Bank whether or not this project is worth funding. For Section 1, perform a Cost-Benefit Analysis (CBA) for the Doonsey Dam project.

Some costs and benefits of the project are as follows:

Costs	(in millions per year)
Construction costs:	$600	For three years. Starting in Year 0
Operating costs:	$50	Starting in Year 3
Agricultural product lost from flooded lands:	$60	Starting in Year 3
Forest products lost from flooded lands:	$20	Starting in Year 3
Benefits
Hydropower to be generated:	$225	Starting in Year 3
Irrigation water available from dam:	$75	Starting in Year 3

Using MS Excel, complete all the calculations for a formal cost-benefit analysis encompassing all of the quantifiable factors listed above. Assume that the lifespan of the dam is 20 years. As in the example in Table 7.5, assume that construction begins now (in Year 0). All other impacts start once the dam is completed (in Year 3) and continue for 20 years (until Year 22). Refer to Appendix 7.1 to make the necessary calculations using Excel. Use two possible discount rates: 5 percent and 8 percent. For each rate, what is the present value of the dams benefits and costs? What are your policy recommendations for each discount rate? Remember that there are also unquantified impacts.

\begin{tabular}{|c|c|c|c|c|c|c|} \hline \multirow{3}{*}{\begin{tabular}{|c|} 8% \\ YEAR \\ \end{tabular}} & \multicolumn{4}{|c|}{ COSTS (all values in millions) } & \multicolumn{2}{|c|}{ BENEFITS (all values in millions) } \\ \hline & Dam Construction & Operations & Lost Agricultural Value & Lost Forest Value & Hydropower & Irrigation \\ \hline & $600 & & & & & \\ \hline 0 & & & & & & \\ \hline 1 & & & & & & \\ \hline 2 & & & & & & \\ \hline 3 & & & & & & \\ \hline 4 & & & & & & \\ \hline 5 & & & & & & \\ \hline 6 & & & & & & \\ \hline 7 & & & & & & \\ \hline 8 & & & & & & \\ \hline 9 & & & & & & \\ \hline 10 & & & & & & \\ \hline 11 & & & & & & \\ \hline 12 & & & & & & \\ \hline 13 & & & & & & \\ \hline 14 & & & & & & \\ \hline 15 & & & & & & \\ \hline 16 & & & & & & \\ \hline 17 & & & & & & \\ \hline 18 & & & & & & \\ \hline 19 & & & & & & \\ \hline 20 & & & & & & \\ \hline 21 & & & & & & \\ \hline 22 & & & & & & \\ \hline Total Present Valu & & & & & & \\ \hline Total PV of Costs & & & & & Total PV of Benefits & \\ \hline Net PV Benefits: & & & & & & \\ \hline \end{tabular}