Question: 11. A flood control project will have a first cost of $1.4 million with an annual maintenance cost of $40,000 and a 10 year life.

11. A flood control project will have a first cost of $1.4 million with an annual

maintenance cost of $40,000 and a 10 year life. Reduced flood damage is

expected to amount to $175,000 per year. Lost income to farmers is estimated

to be $25,000 per year. At an interest rate of 6% per year, should the

project be undertaken?

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