Business, 01.02.2021 21:40 marsewilliams

A water resources engineer is trying to run a cost-benefit analysis for a project. They need to first decide on the planning period (the benefits should be calculated over N years, and N should be determined). If N is too large, then the future benefits in those years (e. g. 70 years from now) will have a very low present value. Therefore, the engineer would like to cut off the planning period after a point when the present equivalent of benefits becomes less than 6.25% of that future benefit. If the interest rate is 8%, use the rule of 72 to determine the duration of the planning period (N). Hint 1: Using rule of 72, first determine after how many years a present worth doubles, after how many years it quadruples, and so on. Hint 2: What is the ratio between the future benefit and their present equivalent in those years you calculated in Hint 1

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A water resources engineer is trying to run a cost-benefit analysis for a project. They need to firs...

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