A flood control dam is planned for economic development. The dam has a perpetual time horizon (100-year lifetime) and requires construction costs of $25m. The gates of the dam have an operational life of 7 years, after which the gates will become ineffective. The cost of gate replacement is $3m, which will be repeated every 7 years. In addition, annual operational costs are $100K/year. A transfer premium of $5m is expected after three years. The discount rate is 10%/yr. a. Find and decompose the project’s capitalized worth (CW) using the BOT approach. b. Summarize your findings in a BOT Table. c. What is the annual project impact on GDP?
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