Alternative A. Build a coal-powered generating facility at a cost of $20,000,000. Annual power sales are expected to be $1,000,000 per year. Annual operating and maintenance costs are $200,000 per year. A benefit of this alternative is that it is expected to attract new industry, worth $500,000 per year, to the region. Alternative B. Build a hydroelectric generating facility. The capital investment, power sales, and operating costs are $30,000,000, $800,000, and $100,000 per year, respectively. Annual benefits of this alternative are as follows: Flood-control savings Irrigation Recreation Ability to attract new industry 600, 000 200, 000 100, 000 400, 000

Alternative A. Build a coal-powered generating facility at a cost of $20,000,000. Annual power sales are expected to be $1,000,000 per year. Annual operating and maintenance costs are $200,000 per year. A benefit of this alternative is that it is expected to attract new industry, worth $500,000 per year, to the region. Alternative B. Build a hydroelectric generating facility. The capital investment, power sales, and operating costs are $30,000,000, $800,000, and $100,000 per year, respectively. Annual benefits of this alternative are as follows: Flood-control savings Irrigation Recreation Ability to attract new industry 600, 000 200, 000 100, 000 400, 000

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter17: Long-term Investment Analysis

Section: Chapter Questions

Problem 10E

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