A dam may be built at a cost of $10M to eliminate the periodic flooding that Lowville experiences. That flooding averages a cost of $300K per year. Additional expenses can be incurred to divert water to another area for irrigation, to add electric power generation, and to permit recreation. Which alternative is best? Since political support is crucial, allocate the costs to the uses. The interest rate is 5%, and the horizon is 50 years. Calculate a benefit/cost ratio for your recommended alternative.
