Draw respective cash flow diagrams and carryout

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Reference no: EM131329459

The City of Boulder Colorado is considering three sites for flood control dams to prevent flooding resulting from the annual spring snow melt in the Rocky Mountains. Each dam would be built on different branches of a large river, designated as the East, West and North branches. The construction costs are $22 million, $13 million and $11 million, with annual maintenance costs expected to be $33 000, $18 000 and $15 000 respectively. In addition, an $80 000 expenditure will be required every 10 years at each site. The present cost of flood damage is $22 million per year. If the East Dam is constructed, the flood damage will be reduced to $0.75 million per year. If the West Dam is built, the damage will be reduced to $1.25 million per year. Similarly, if the North Dam is built, the damage will be reduced to $1.7 million per year. The interest rate is 5% per year and only one dam can be built. Do an incremental Benefit/Cost Analysis to select the best dam, if any, for construction. Draw respective Cash Flow Diagrams and carryout the decimal form of interest rates to 4 decimal places, and interest factors to 5 decimal places.

Reference no: EM131329459

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