Mat-i dam complex on the Madaguing River in Claveria will have an installed capacity inexcess of 11,000 MW. The project is expected to cost P1.60 billion and will beginproducing electricity upon completion by the end of 2019 after the 5-year constructionperiod. Even though the dam will provide clean energy for millions of people,environmentalists are sharply opposed. They say it will devastate wildlife and thelivelihoods of 40,000 people who live in the area to be flooded. Assume that the fundingwill occur evenly over the 5-year construction period (i.e., 0.32 billion per year), and thatthe disbenefits will be P6,000 for each displaced person and P100 million for wildlifedestruction. Further, assume the disbenefits will occur evenly through the 5-yearconstruction period and the benefits will begin in 2020 and continue indefinitely. At adiscount rate of 8% per year, use the B/C ratio to determine the minimum annual benefitsrequired to economically justify the project.

B/C ratio is ratio present value of benefits to ratio present value of cost and it should be…

electricity upon completion by the end of 2019 afte en though the dam will provide clean energy talists are sharply opposed. They say it will de of 40,000 people who live in the area to be flooded. venly over the 5-year construction period (i.e., 0.32 efits will be P6,000 for each displaced person and . Further, assume the disbenefits will occur eve period and th afte 2000

electricity upon completion by the end of 2019 afte en though the dam will provide clean energy talists are sharply opposed. They say it will de of 40,000 people who live in the area to be flooded. venly over the 5-year construction period (i.e., 0.32 efits will be P6,000 for each displaced person and . Further, assume the disbenefits will occur eve period and th afte 2000

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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