A site on a major river is being evaluated for a new lock and dam for navigation purposes.Two options are considered: (a) single 1200-foot lock or (b) single 1200-foot lock and asingle 600-foot lock (two locks, side by side). Benefits and costs of the two options areindicated in the table. Interest rate to be used is 7%, and the planning period is 50 years.Initial costAnnual operating costAnnual benefitSingle Lock($ million)60.01.012.0Double Locks($ million)85.01.516.0(a-5 pts) Show the cash flow table for both options. (You may show only for the firstthree years as the same numbers will repeat for the remaining planning period.)(b-10 pts) Solve by the present worth method.(c-10 pts) Solve by the annual cash flow method.(d-10 pts) Solve by the incremental benefit-cost ratio method.(e-5 pts) Check your solutions for (b), (c), and (d). Are they different? Explain.

Answered: A site on a major river is being…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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