The World Bank is considering an application from the country of Equatoria for a large dam project. In order to build this dam, villagers from an entire village will need to be relocated. In addition, there will be some watershed damage and ecological losses due to habitat destruction. Monetary costs and benefits for the dam project are given as follows: Construction costs: $650 million at the beginning of the first year of the project. Construction costs for the start of the second year of the project will be 12% higher than the first year costs, and at the start of year 3 (the final year of construction) the costs will be 15% higher than the first year costs. Operating costs: $75 million/year (starting in year 3); and then increase to $80 million/year from year 8 onward Hydropower generated: 4 billion kilowatt hours/year (available from year 3) Price of electricity: $0.08/kilowatt hour Irrigation water available from the dam: 20 billion litres/year (available from year 3) Price of water: $0.008/litre Agricultural production lost from flooded lands: $54 million/year (loss from year 2) Forestry production lost from flooded lands: $28 million/year (loss from year 2) Note: 1 billion = 1000 million You, as a consultant have been approached by the World Bank to carry out an analysis from which you will provide your recommendations. Your tasks: A. Calculate the NPV and the B/C using a real discount rate of 4.6%. Underneath Yr 10 put Yr 11 to infinity (11 infinity). B. Now consider an alternative project: several smaller dams constructed to avoid flooding significant agricultural land or forested areas. For this project, total construction costs are exactly half the costs of the large dam project, while operating costs are two-thirds those of the large dam. Power and irrigation benefits are also half as much as those for the large dam. Agricultural land and forests are not affected and the project incurs no ecological or resettlement costs. (i) Calculate the NPV of this Smaller Dams Project using the discount rate of 4.6%. (ii) Now you are to compare both projects under different discount rates. Set up a table with a column containing various discount rates, another column for the NPV for the Large Dam Project and a third column for the NPV for the Small Dams Project. (iii) For just the Large Dam Project, carry out this sensitivity analysis: Suppose the amount of hydropower generated was overestimated, and instead 3.2 billion kilowatt hours/year were generated and in addition, the price of electricity was $0.06/kilowatt hour and the price of water was $0.005/litre. Make these changes and make a note of the new NPV and B/C, and then return your analysis to its original numbers for handing in. c. Finally, in your Word document you are to evaluate the two projects, the Large Dam project (originally, before the sensitivity analysis) and the Smaller Dams project individually and then make comparison between the two. Your evaluation should include a discussion on the costs and benefits not quantified in your spreadsheet analyses. In this discussion make recommendations as to how you could incorporate these costs and benefits into your spreadsheet analysis. Conclude this analysis by giving your final recommendations to the World Bank. Word limit: 600 words