A "Special Commission for Beaches" is formed to design, build and operate a series of beach resorts along the Charles River, which is expected to get cleaner year after year. The SCB is allowed to raise money by selling tax-free bonds (currently selling at about 4% for similar agencies). Revenues will come from user fees and, if necessary, from Cambridge, Boston, and other cities and towns along the river. What discount rate do you use in deciding how fancy to make the bathhouses, the restaurants, and the boating facilities? 11% 7% 4% 15%

A "Special Commission for Beaches" is formed to design, build and operate a series of beach resorts along the Charles River, which is expected to get cleaner year after year. The SCB is allowed to raise money by selling tax-free bonds (currently selling at about 4% for similar agencies). Revenues will come from user fees and, if necessary, from Cambridge, Boston, and other cities and towns along the river. What discount rate do you use in deciding how fancy to make the bathhouses, the restaurants, and the boating facilities? 11% 7% 4% 15%

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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You are considering an investment that will pay you $1,200 per month for three years. The first payment occurs one month from today. What is the present value of this investment if the annual percentage rate is 12 percent?
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MaxiCare Corporation, a not-for-profit organization, specializes in health care for senior citizens. Management is considering whether to expand operations by opening a new chain of care centers in the inner city of large metropolitan areas. For a new facility, initial cash outlays for lease, renovations, net working capital, training, and other costs are expected to be about $18 million. The corporation expects the cash inflows of each new facility in Year 1 to equal zero. Net cash inflows are expected to increase to $5.5 million in each of years 2 and 3; $2.5 million in year 4; and $3.0 million in each of years 5 through 10. The lease agreement for the facility will expire at the end of year 10, and MaxiCare expects the cost to close a facility will pretty much exhaust all cash proceeds from the disposal. Cost of capital for MaxiCare is estimated as 12%. Assume that all cash flows occur at year end. Required: 1. Compute (using the built-in NPV function in Excel) the net present value…
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Larry’s Lawn Service (LLS) currently offers a single lawn maintenance service that includes cutting grass, trimming shrubs, and removing leafs. LLS is considering offering an additional lawn care service which will include fertilizing and pest control. LLS hired you to perform a study to determine whether or not LLS should in fact go ahead with the new service. Your fee to LLS is $10,000 which is due whether LLS makes the investment in the new project or not. Additionally, if this new lawn care service is implemented, LLS believes that it will actually increase business for its original lawn maintenance service. You have estimated the dollar value of this benefit to the existing lawn maintenance service to be $20,000/year 33.) For LLS, the $10,000 fee is a: Question 33 options: Incremental cash flow Externality Sunk cost Opportunity cost
A privately run, for-profit, prison is considering ways in which it can cut its monthly costs and therefore increase profit. One idea it is considering is to pay a judge to guarantee convicted prisoners in poor health win their appeals and are set free. The prison believes it can realize the monthly cost savings below over the initial year of the plan. What is the present value of the first year's monthly cost savings? My answer is suppose to come up with 49701. This is the third time I have sent this problem threw I need to be credited for the other two times. I am waisting my questions by having to resubmit the questions 2 to 3 times. Please help thanks!! Month Savings ($) 1 3,500 2 6,000 3 6,500 4 9,000 5 9,000 6 9,000 7 9,400 8 9,800 9 4,800 10 5,000 11 2,000 12 3,500 Total 77,500
The city of Bloomington is deciding if they are going to be able to justify an additional street light. The cost of the light to install is $14,000. City officials believe it will reduce the death rate at that intersection from 1.0% to 0.6%. Our guideline for valuing human life is $8M per person. What is the net of this cost benefit proposal? A. 32,000 B. 18,000 C. (18,000) D. (32,000)
The city engineer and economic development directors are evaluating two sites for construction of a multipurpose sports arena. The sites are downtown (DT) and southwest (SW) of the metropolitan area. The city already owns enough land at the DT site; however, th land for a parking garage will cost $1 million, and construction costs will be $10 million for the parking garage, infrastructure relocatie and drainage. The SW site is 30 km from downtown, but the land will be donated by a developer who knows that an arena at this sit will dramatically increase the value of the remainder of his land holdings. Because of its centralized location, there will be greater attendance at most of the events held at the DT site. This will result in more revenue to vendors and local merchants in the amount $550,000 per year. Additionally, the average attendee will not have to travel as far, resulting in annual benefits of $400,000 per yea All other costs and revenues are expected to be the same at either…
Assume that, as a part of its economic development program, your governmental agency has committed to provide access to a new regional industrial park. This project must fund the construction of an on/off-interchange from an adjacent highway, a 2-mile length of 4-lane divided roadway, and a bridge that will cross a 500-foot wide river. The entire project is estimated to require 2 years to complete following planning & design.The roadway to be constructed is projected to cost $125,000 per lane mile. It will need to begin construction 12 months prior to the project’s estimated completion date. Your government controls the permitting process for the roadway and has already issued the necessary permits. The total roadway project will be paid for at its completion

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