Question 2: It is 2010 and the discount rate is 5%. The real costs and benefits associated with a proposed project are as follows (expressed in millions of of 2010 dollars) - i.e. they have already been adjusted for inflation. Calculate the present value benefits (PVB) and the present value costs (PVC). Given your answers, should the project be pursed or not? Year Benefits Costs 2010 100 1,000 2011 300 1,000 2012 1,000 500 2013 1,600 200

Question 2: It is 2010 and the discount rate is 5%. The real costs and benefits associated with a proposed project are as follows (expressed in millions of of 2010 dollars) - i.e. they have already been adjusted for inflation. Calculate the present value benefits (PVB) and the present value costs (PVC). Given your answers, should the project be pursed or not? Year Benefits Costs 2010 100 1,000 2011 300 1,000 2012 1,000 500 2013 1,600 200

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter5: Investment Decisions: Look Ahead And Reason Back

Section: Chapter Questions

Problem 5.4IP

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