The city government considers investing on a theme park to be located near the shore. The estimated contract cost is $200M. Those living along the shoreline must be compensated accordingly and the government projects that they need to spend about $50M to give out to the families. The theme park must be maintained by the contractor at a price $2M per year. When the theme park is fully operational, it will accommodate 10,000 tourists per month, and will have an average net sales of $350,000 from ticket sales, less 10% for government taxes. Opening a theme park will also attract more investors within the area due to high volume of tourists and the government estimates to receive $500,000 yearly from the investors. Use B-C ratio to assess the acceptability of the proposal. Use a 15-year study period. MARR is 10% per year.
The city government considers investing on a theme park to be located near the shore. The estimated contract cost is $200M. Those living along the shoreline must be compensated accordingly and the government projects that they need to spend about $50M to give out to the families. The theme park must be maintained by the contractor at a price $2M per year. When the theme park is fully operational, it will accommodate 10,000 tourists per month, and will have an average net sales of $350,000 from ticket sales, less 10% for government taxes. Opening a theme park will also attract more investors within the area due to high volume of tourists and the government estimates to receive $500,000 yearly from the investors. Use B-C ratio to assess the acceptability of the proposal. Use a 15-year study period. MARR is 10% per year.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Calculate the conventional B-C ratio using AW. Write in four decimal places.
Transcribed Image Text:The city government considers investing on a theme park to be located near the shore. The estimated contract cost
is $200M. Those living along the shoreline must be compensated accordingly and the government projects that they need to
spend about $50M to give out to the families. The theme park must be maintained by the contractor at a price $2M per year.
When the theme park is fully operational, it will accommodate 10,000 tourists per month, and will have an average net sales
of $350,000 from ticket sales, less 10% for government taxes. Opening a theme park will also attract more investors within the
area due to high volume of tourists and the government estimates to receive $500,000 yearly from the investors. Use B-C ratio
to assess the acceptability of the proposal. Use a 15-year study period. MARR is 10% per year.
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Calculate the modified B-C ratio using AW. Write in four decimal places.
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