(3) Due to earlier snowmelt associated with climate change, there is a need to replace the water storage formerly provided by snowpack with a new reservoir. The Bureau of Reclamation is therefore...

Extracted text: (3) Due to earlier snowmelt associated with climate change, there is a need to replace the water storage formerly provided by snowpack with a new reservoir. The Bureau of Reclamation is therefore considering a multi-purpose reservoir on Temple Fork in Logan Canyon. The reservoir and dam will provide water supply and hydroelectricity. The following data were gathered to facilitate a cost-benefit analysis of the project. Initial Construction Costs: $35,000,000 Annual Value of Electricity Production: $600,000 Annual Value of Water Supply: $2,000,000 a) What is the project's benefit/cost ratio at a discount rate of 4%? (Assume a 50-year time horizon and annual compounding.) Does it pass the BCA test? b) Does the project pass the test at a discount rate of 10%?