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    Hao Doan
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    This document presents a least cost analysis of two alternatives for a drinking water project: a smaller pipe (Alternative A) and a bigger pipe (Alternative B). It shows the installation costs, operating costs, total costs, and present value of total costs for each alternative over 5 years using discount rates of 6% and 9%. The results show that Alternative A has a lower present value of total costs at a 6% discount rate, while Alternative B is lower cost at a 9% discount rate, indicating the preferred alternative depends on the discount rate used.

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    This document presents a least cost analysis of two alternatives for a drinking water project: a smaller pipe (Alternative A) and a bigger pipe (Alternative B). It shows the installation costs, operating costs, total costs, and present value of total costs for each alternative over 5 years using discount rates of 6% and 9%. The results show that Alternative A has a lower present value of total costs at a 6% discount rate, while Alternative B is lower cost at a 9% discount rate, indicating the preferred alternative depends on the discount rate used.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PDF, TXT or read online from Scribd
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    4 views1 page

    Least Cost

    Uploaded by

    Hao Doan
    This document presents a least cost analysis of two alternatives for a drinking water project: a smaller pipe (Alternative A) and a bigger pipe (Alternative B). It shows the installation costs, operating costs, total costs, and present value of total costs for each alternative over 5 years using discount rates of 6% and 9%. The results show that Alternative A has a lower present value of total costs at a 6% discount rate, while Alternative B is lower cost at a 9% discount rate, indicating the preferred alternative depends on the discount rate used.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PDF, TXT or read online from Scribd
    Flag for inappropriate content
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    Fulbright Economics Teaching Program The Appraisal of Development Expenditures Least cost analysis

    2004-2005 Lecture Note

    Least Cost Analysis


    Drinking Water Project

    Discount rate = 6%

    Alternative A: Smaller pipe


    (All figures in '000)

    Years 0 1 2 3 4 5

    Installation cost 3000


    Operating cost 700 700 700 700 700

    Total cost 3000 700 700 700 700 700

    PV of Total cost $5,949 PV of Total cost (at 9%) 5723

    Alternative A: Biger pipe


    (All figures in '000)

    Years 0 1 2 3 4 5

    Installation cost 4200


    Operating cost 400 400 400 400 400

    Total cost 4200 400 400 400 400 400

    PV of Total cost $5,885 PV of Total cost (at 9%) 5756

    The results switch with change in discount rate.

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