IN EXCEL!! A certain public library is evaluating the possibility of investing in equipment and licenses to provide its users with access to e-books. To achieve this, they will need to invest $53,000 in building renovations, including wiring. They will need to purchase equipment at a cost of $21,000 and make an initial investment of $1.7 million in electronic volumes, which will also require $1 million annually for maintenance. To evaluate this public project, an interest rate (i) of 8% and a planning horizon of 15 years will be used. At the end of that period, it is estimated that the building renovations will have a residual value equivalent to 30% of the original investment. The residual value of the equipment and other acquisitions will be negligible at the end of 10 years. It is estimated that the acquisition of this new system will lead to about 10,500 "visits" per year in the first year, increasing by 500 visits each year. The benefits for the users of this project are estimated at $7.00 per visit. Use a cost-benefit analysis to determine if the project is justified. What is the minimum benefit per visit that must be received from the project to justify it?
IN EXCEL!! A certain public library is evaluating the possibility of investing in equipment and licenses to provide its users with access to e-books. To achieve this, they will need to invest $53,000 in building renovations, including wiring. They will need to purchase equipment at a cost of $21,000 and make an initial investment of $1.7 million in electronic volumes, which will also require $1 million annually for maintenance. To evaluate this public project, an interest rate (i) of 8% and a planning horizon of 15 years will be used. At the end of that period, it is estimated that the building renovations will have a residual value equivalent to 30% of the original investment. The residual value of the equipment and other acquisitions will be negligible at the end of 10 years. It is estimated that the acquisition of this new system will lead to about 10,500 "visits" per year in the first year, increasing by 500 visits each year. The benefits for the users of this project are estimated at $7.00 per visit. Use a cost-benefit analysis to determine if the project is justified. What is the minimum benefit per visit that must be received from the project to justify it?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:IN EXCEL!! A certain public library is evaluating the possibility of investing in equipment and licenses to provide its users
with access to e-books. To achieve this, they will need to invest $53,000 in building renovations, including wiring. They
will need to purchase equipment at a cost of $21,000 and make an initial investment of $1.7 million in electronic
volumes, which will also require $1 million annually for maintenance. To evaluate this public project, an interest rate (i) of
8% and a planning horizon of 15 years will be used. At the end of that period, it is estimated that the building
renovations will have a residual value equivalent to 30% of the original investment. The residual value of the equipment
and other acquisitions will be negligible at the end of 10 years. It is estimated that the acquisition of this new system will
lead to about 10,500 "visits" per year in the first year, increasing by 500 visits each year. The benefits for the users of this
project are estimated at $7.00 per visit. Use a cost-benefit analysis to determine if the project is justified. What is the
minimum benefit per visit that must be received from the project to justify it?
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