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<br />. <br /> <br />. <br /> <br />procedures of economic analysis on one project and those of <br />financial feasibility analysis on its alternative, Therefore, <br /> <br />the same discount rate (7 1/2%, with 5% and 10% used for purposes <br />of sensitivity analysis) must be used for both the hydropower <br /> <br />project and its alternative. Furthermore, if insurance costs are <br />to be charged against the coal cycling alternative, then a <br />similar risk premium should be charged against the hydropower <br /> <br />. <br />project, which also carries risks, whether or not they are <br /> <br />self-insured. You may include a risk premium in the costs of <br /> <br />every option, or you may omit such a premium from the the costs <br /> <br />of every option, or you may omit such a premium from the costs of <br /> <br />every option, on the grounds that it is a matter of detail which <br /> <br />need not be included in a preliminary study, You may not, <br /> <br /> <br />however, include it in the costs of some options but not in <br /> <br />others. Finally, the charge for taxes should be excluded from <br />the costs of all options. Taxes are simply transfer payments, <br /> <br />not real resource costs, from an economic perspective, and they <br /> <br />should not be included in any economic efficiency calculation fo <br /> <br />this reason. <br /> <br />Period of Analysis <br /> <br />The period of analysis will consist of the estimated project <br />life (up to 100 years) and a preceeding authorization and <br />construction period. Benefits and costs occurring throughout the <br />period of analysis will be brought to the present (1982) for <br /> <br />comparison and aggregation using conventional discounting <br /> <br />procedures, <br /> <br />-11- <br /> <br />;. <br />