Imagine that you are investigating the Costs and Benefits of a New Nuclear power plant.You are told that because of the Radioactive waste the plant will have Annual costs of $25 million, for ever.If you are told the Discount rate to use is 10% -- What is the Present Value of this infinite Stream of Annual Costs?Total Present Value of Annual Costs = $A] million (No Units)%3D23

Present value is the value today of a future stream of payments given the discount rate. Annual cost…

Answered: Imagine that you are investigating the…

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter8: Cost Analysis

Section: Chapter Questions

Problem 3E

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1. A trout ranch is now for sale for $40,000. Annual property taxes, maintenance, supplies, and so on are estimated to continue to be $3,000 per year. Revenues from the ranch are expected to be $10,000 next year and then to decline $500 per year thereafter through the tenth year. If you bought the ranch, you would plan to keep it for only five years and at that time to sell it for the value of the land, which is $15,000. If you desired annual rate of return is 12%, should you become a trout rancher? Use the PW method.
A diesel refinery is upstream of an industrial farm. The runoff from the refinery pollutes the river and damages the crops. The farm earns $499 using the polluted water, but would earn $628 if it were clean. The refinery earns $1772 but would only earn $1607 if it had to divert resources to prevent the runoff. There are no environmental laws. Assume that a scrubbing machine that would prevent the runoff costs $24 plus an installation cost. What is the most that installation could cost for clean water to be the socially optimal outcome achieved through private bargaining? O a. $141.00 O b. $36.00 O c. Anything, the machine is not required as clean water will already be achieved. O d. $105.00 O e. $165
4. You have developed an innovative new project that is estimated to produce an annual revenue stream (money in) of $15,000 per year for the next 10 years. Your current corporate cost of Money is 4%. However, in year 5, your CFO projects that rate will rise to 6% for the remaining five years of the project's lifespan. What is the NPV of this money in cashflow today? (we are ignoring any money out costs)
1. You purchased a building five years ago for $100,000. Its annual maintenance expense has been $5,000 per year. At the end of three years, you spent $9,000 on roof repairs. At the end of five years (now), you sell the building for $120,000. During the period of ownership, you rented the building for $10,000 per year paid at the beginning of each year. Use the AW method to evaluate this investment when your MARR is 12% per year.
You are a consultant to a large manufacturing corporation that is considering a project with the following net after-tax cash flows (in millions of dollars): Years from Now 0 1-10 After-Tax Cash Flow -85 19 The project's beta is 1.2. Required: a. Assuming that rf= 7% and E(TM) = 11%, what is the net present value of the project? Note: Do not round intermediate calculations. Enter your answer in millions rounded to 2 decimal places. b. What is the highest possible beta estimate for the project before its NPV becomes negative? Note: Round your answer to 2 decimal places. a. Net present value b. Highest beta
101 Use the following information to answer the question which immediately follows Y = 2,000, GT-200, Cd=400 +0.9(Y-T) - 600r, 1200-80r, L-0.5Y 500, M-5000, P-7.35, n² = 0.02 What is the value of r? Select one a 0.58 Ob. 0.45 OC 0.62 Od 0.38 13
1. Victor's Jewelers sells watches for R500 each. During the next month, they estimate that they will sell 15, 25, 35, or 45 watches. They can only buy watches in lots of ten from their dealer, where 10, 20, 30, 40, and 50 watches cost R400, R390, R370, R360, and R340 per watch respectively. Every month, Victor has a clearance sale and will get rid of any unsold watches for R240 (watches are only in style for a month and so they have to buy the latest model each month). Any customer that comes in during the month to buy a watch, but is unable to, costs Victor R60 in lost goodwill. Set-up the payoff matrix for this problem.
let's say you have a project that has an initial investment of $3 million and annual after-tax cash flows of $1 million for 5 years. at the end of the project, you can sell the project for a profit but your net after tax proceeds are actually negative $1.066 million due to environmental clean-up costs. what is the irr? round to nearest percentage then no decimal places and use the % symbol.....8% would be the form of a correct answer.
Jane quit her job at IBM where she earned $50,000 a year. She cashed in $50,000 in corporate bonds that earned 10% interest annually to buy a mini-bus. Jane has decided to buy the mini-bus and set up a commuter service between Lincoln and Omaha. There are 1000 people who will pay $400 a year each for the commuter service; $280 from each person goes for gas, maintenance, insurance, depreciation, etc. What are Jane's total revenue? A. $600,000 B. $250,000 C. $400,000 D. $480
You purchased forest land. After 4 years, you prune your trees at a cost of $200 per acre. What is the present value of your pruning investment, assuming a 7 percent discount rate?
1. As part of a new residential development, the City of Prescott is considering a new pump system to provide water. Before making a final decision on a particular pump system, the City Engineer needs provide management with an annual cost for budgeting purposes over the next four-years. The pump costs have already been accepted. Using the data in the following table, what is the equivalent annual maintenance cost for the system, assuming 4% interest is available to the City for bonding purposes? [Hint - consult slides 33 and 34 from 10/26/2021 lecture.] Year Maintenance Cost 1 $200 2 $400 $600 4 $800 2. For budgeting purposes, the City Manager wants to know the present worth of the annual maintenance costs in the previous problem (at year 0). Using the same 4% interest rate, what is the present worth? 3. Not satisfied with the information developed in the previous two problems, the City Manager wants the City Engineer to negotiate another arrangement for satisfying the maintenance…
Suppose mitigating greenhouse gas emissions today resulted in a benefit of 10 million dollars realized 100 years in the future. What is the present value of the 10 million dollars discounted at a standard 6% rate?

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