n 2016, the city of Abu Dhabi collected $24 million in fines from motorists because of traffic violations caught by red-light cameras. The cost of operating the system was $14.5 million. The net profit, that is, profit after operating costs, is split equally (that is, 50% each) between the city and the operator of the camera system. What will be the rate of return over a 3-year period to the contractor that paid for, installed, and operates the system, if its initial cost was $10 million and the profit for each of the 3 years is the same as it was in 2016? Should the company invest in this project at MARR of 15% per year?
n 2016, the city of Abu Dhabi collected $24 million in fines from motorists because of traffic violations caught by red-light cameras. The cost of operating the system was $14.5 million. The net profit, that is, profit after operating costs, is split equally (that is, 50% each) between the city and the operator of the camera system. What will be the rate of return over a 3-year period to the contractor that paid for, installed, and operates the system, if its initial cost was $10 million and the profit for each of the 3 years is the same as it was in 2016? Should the company invest in this project at MARR of 15% per year?
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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In 2016, the city of Abu Dhabi collected $24 million in fines from motorists because of traffic violations caught by red-light cameras. The cost of operating the system was $14.5 million. The net profit, that is, profit after operating costs, is split equally (that is, 50% each) between the city and the operator of the camera system. What will be the rate of return over a 3-year period to the contractor that paid for, installed, and operates the system, if its initial cost was $10 million and the profit for each of the 3 years is the same as it was in 2016? Should the company invest in this project at MARR of 15% per year?
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