ECN437ConstructingaDam

ECN437ConstructingaDam - the next four years. Once...

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ECN437 Constructing a Dam A state government is considering building a dam to provide water for  irrigation. The dam would cost $25 million to build which would be paid in  five payments of $5 million each. The first payment would be made  immediately and the remaining payments would come at the end of each of 
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Unformatted text preview: the next four years. Once constructed, the dam would take a year to fill and would begin producing benefits at the end of the fifth year. The benefits would be $3 million per year and would go on forever. What is the present value of the dam if the interest rate is 5%?...
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