What do you advise to the city

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A city hires you to evaluate whether it should invest in a water system improvement. The project is expected to generate benefits (in savings to the city) of $14 million today (present period), $5 million in one year from today, and $1 million in two years from today. The project has no returns after that. The project costs nothing today, but will cost $22 million in two years. The interest rate is 10%. What do you advise to the city?

a. The project should be funded

b. The project should not be funded

c. Uncertain

Reference no: EM132593427

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