Find The net present value of the project if discounted at a social discount rate of 7%. Question III: Provide a justified policy recommendation considering the casedescribed below:($ thousands)Fiscal Year2009 2010 2011 2012 2013 2014 2015 2016 2017 2018Benefit SourcesElement 15005255506006507008001000Element 2250350500600750800900Element 3100100100100100100100Element 40.5050505050505050Fiscal Year2009 2010 2011 2012 2013 2014 2015 2016 2017 2018Cost SourcesElement 13002502500.Element 22001501500.0.Element 33002502500.0.0.0.Element 40.4004505000.0.0.Element 50.1501501500.0.0.Element 64004004000.0.rind ( I.O O o 0

We will calculate the Net Present Value of the project to identify the feasibility of this project.…

Question III (7 : Provide a justified policy recommendation considering the case described below: ($ thousands) Fiscal Year 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Benefit Sources Element 1 0. 500 525 550 600 650 700 800 1000 Element 2 0. 250 350 500 600 750 800 900 Element 3 0. 100 100 100 100 100 100 100 Element 4 0. 50 50 50 50 50 50 50 50 Fiscal Year 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Cost Sources Element 1 300 250 250 0. Element 2 0. 200 150 150 0. 0. 0. Element 3 0. 300 250 250 0. Element 4 0. 0. 400 450 500 0. 0. 0. 0. Element 5 0. 150 150 150 0. 0. 0. Element 6 400 400 400 0. 0.

Question III (7 : Provide a justified policy recommendation considering the case described below: ($ thousands) Fiscal Year 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Benefit Sources Element 1 0. 500 525 550 600 650 700 800 1000 Element 2 0. 250 350 500 600 750 800 900 Element 3 0. 100 100 100 100 100 100 100 Element 4 0. 50 50 50 50 50 50 50 50 Fiscal Year 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Cost Sources Element 1 300 250 250 0. Element 2 0. 200 150 150 0. 0. 0. Element 3 0. 300 250 250 0. Element 4 0. 0. 400 450 500 0. 0. 0. 0. Element 5 0. 150 150 150 0. 0. 0. Element 6 400 400 400 0. 0.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

If a project costs $90,000 and is expected to return $24,500 annually, how long does it take to recover the initial investment? What would be the discounted payback period at i = 15% ? Assume that the cash flows occur continuously throughout the year. The payback period is years. (Round to one decimal place.)
Aero Motorcycles is considering opening a new manufacturing facility in Fort Worth to meet demand for a new line of solar charged motorcycles (who wants to ride on a cloudy day anyway?) The proposed project has the following features; • The firm just spent $300,000 for marketing study to determine consumer demand (@ t=0). • Aero Motorcycles purchased the land the factory will be built on 5 years ago for $2,000,000 and owns it outright (that is, it does not have a mortgage). The land has a current market value of $2,600,000. • The project has an initial cost of $20,902,178 (excluding land, hint: land is not subject to depreciation). • If the project is undertaken, the company will realize an additional $8,000,000 in sales over each of the next ten years. (i.e. sales in each year are $8,000,000) • The company’s operating cost (not including depreciation) will equal 50% of sales. • The company’s tax rate is 35 percent. • Use a 10-year straight-line depreciation…
The state of Glottamora has $300 million remaining in its budget for the current year. One alternative is to give Glottamorans a one-time tax rebate. Alternatively, two proposals have been made for state expenditures of these funds. The first proposed project is to invest in a new power plant, costing $300 million and having an expected useful life of 20 years. Projected benefits of the new power plant are as follows: Years Benefits per Year ($ Millions) 1 - 5 0 6 - 20 60 The second alternative is to undertake a job retraining program, also costing $100 million and generating the following benefits: Years Benefits per Year ($ Millions) 1 - 5 60 6 - 10 42 11 - 20 12 The state Power Department argues that a 5 percent discount factor should be used in evaluating the projects because that is the government’s borrowing rate. The Human Resources Department suggests using a 12 percent rate because that more nearly equals society’s true…
The cost of grading and spreading gravel on a curvy rural road is expected to be $300,000. The road will have to be maintained at a cost of $24,000 per year. Even though the new road is not very smooth, it allows access to an area that previously could only be reached with off-road vehicles. The improved accessibility has led to a 198 % increase in the property values along the road. If the previous market value of the property was $900,000, calculate the conventional B/C ratio using an interest rate of 6% per year and a 20-year study period. The conventional B/C ratio is
Suppose there is a depletable resource that has a stock-size of 28. The static Marginal Net Benefit in each period is 60 - 1.8q. The discount rate is 20% (r=0.2). The dynamic, efficient solution is for units to be extracted in period 1 and units to be extracted in period 2.