Suppose that the City of Nairobi is planning a bid to host the 2032 Olympics and Kas estimated the following benefits: The estimat benefits at the end of year 1 (a,) are $300 million, at the end of year 2 (B.) are $200 million, and at the end of year 3 (s,) only $100 million (after the third year there are no further benefits). If the estimated interest rate is 4% (r0.04) then using the estimated value of benefits equation below, calculate the maximum value (and therefore, the maximum amount that Nairobi should bid) for the 2032 Olympics. B, V (1+ (1+) (1+r)
Suppose that the City of Nairobi is planning a bid to host the 2032 Olympics and Kas estimated the following benefits: The estimat benefits at the end of year 1 (a,) are $300 million, at the end of year 2 (B.) are $200 million, and at the end of year 3 (s,) only $100 million (after the third year there are no further benefits). If the estimated interest rate is 4% (r0.04) then using the estimated value of benefits equation below, calculate the maximum value (and therefore, the maximum amount that Nairobi should bid) for the 2032 Olympics. B, V (1+ (1+) (1+r)
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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![Suppose that the City of Nairobi is planning a bid to host the 2032 Olympics and has
estimated the following benefits:
The estimat benefits at the end of year 1 (8,) are $300 million, at the end of year 2
(B.) are $200 million, and at the end of year 3 (a,) only $100 million (after the third
year there are no further benefits). If the estimated interest rate is 4% (r0.04) then
using the estimated value of benefits eguation below, calculate the maximum value
(and therefore, the maximum amount that Nairobi should bid) for the 2032 Olympics.
B,
B,
(1 (1+ (1+r)](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fea109d44-32a3-4e47-be89-8a145525e2d6%2F536195fe-2067-419f-a4f2-1846e69af8b2%2Fbzq5qk_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Suppose that the City of Nairobi is planning a bid to host the 2032 Olympics and has
estimated the following benefits:
The estimat benefits at the end of year 1 (8,) are $300 million, at the end of year 2
(B.) are $200 million, and at the end of year 3 (a,) only $100 million (after the third
year there are no further benefits). If the estimated interest rate is 4% (r0.04) then
using the estimated value of benefits eguation below, calculate the maximum value
(and therefore, the maximum amount that Nairobi should bid) for the 2032 Olympics.
B,
B,
(1 (1+ (1+r)
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