The government is planning a multiple-purpose hydroelectric project for a river basin. The estimated benefits and costs that are expected to be derived from the three alternatives under consideration are as follows:
The interest rate is 8% and the life of each project is 40 years.
a. Using benefit-cost analysis, determine which project should be selected.
b. What is the rank-ordering of projects from best to worst?
c. If the projects involved intangible benefits that required considerable judgment in assigning their values, would your recommendation be affected?

Initial Cost Annual benefits and costs $30,000,000 $40,000,000 $50,000,000 $1,600,000 $1,250,000 1,800,000 Power sales Flood control saving 225,000 $300,000 $500,000 Irrigation benefits $8,000,000 $450,000 $600,000 Recreation benefits $525,000 $150,000 $350,000 Operating and maintenance costs $220,000 $230,000 $350,000