The federal government is considering closing down a substantial portion of the John Day Fossil Beds in Oregon and selling the land to private interests. In considering this policy, economists advise the government to choose the option that has the highest net present value. They consider costs and benefits into the infinite future.Closing the fossil beds provides an immediate $3 million from the sale of the land andan annual savings of $100,000 in reduced maintenance costs. However, recreational users and conservationists no longer derive any benefit from the land, losing $500,000in benefits annually. a) If the discount rate is r = 2.5%, are the benefits of closing the monument larger than the costs?

The federal government is considering closing down a substantial portion of the John Day Fossil Beds in Oregon and selling the land to private interests. In considering this policy, economists advise the government to choose the option that has the highest net present value. They consider costs and benefits into the infinite future.Closing the fossil beds provides an immediate $3 million from the sale of the land andan annual savings of $100,000 in reduced maintenance costs. However, recreational users and conservationists no longer derive any benefit from the land, losing $500,000in benefits annually. a) If the discount rate is r = 2.5%, are the benefits of closing the monument larger than the costs?

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

The government is considering undertaking four projects. These projects are mutually exclusive, and the estimated present worth of their costs and the present worth of their benefits are shown in millions of dollars in the table below. All of the projects have the same duration. Assuming no do-nothing alternative, which alternative would you select? Justify your choice by using a benefit-cost (BC()) analysis on incremental investment. Click the icon to view the data for the four projects. Which project(s) should be excluded from subsequent consideration? Select all that apply. A. None of the projects B. Project A2 C. Project A1 D. Project A3 E. Project A4 Fill in the table below. (Round to two decimal places.) Project A1 A2 A3 A4 www Incremental Investment A4 - A3 A2 - A4 BC(1) 47 1.36 2.8 1.64 BC(1) K-j
The goal of the local Agenda 21 Program was to help communities generate activities to reduce greenhouse gas emissions. According to its website, Environment Canada planned to sponsor individual and community actions to promote sustainable development and greener societies for $6 million in 1997, and $5.2 million in 1998, 1999, 2000, and 2001. a) Display each item along an appropriate timeline. b) Find the formula and compute the present value of the Agenda 21 Program in 2023 dollars (using a 5% annual discount rate), c) Suppose that this program is the only action Canada undertakes in this domain. If some economists at Environment Canada claimed that the Action 21 Program is worth undertaking, because the amount you calculated in b) is equivalent to the change in consumer surplus (in the relevant markets, say for medical care, etc.) due to living in a greener environment, would you agree or disagree with these economists? Explain.
12
Two refrigerators are available for purchase. One costs more to buy but less to operate as shown below. Both are expected to last 10 years. 3. Refrigerator A $840 Refrigerator B $700 Purchase Price: Annual Operating Cost (in each year): $100 $120 Which is the cheaper source of refrigeration over a ten-year period? Does the prevailing interest rate affect your answer? (Hint: calculate the answer using 3% and again using 12%.)
Economics 7.11 Consider the projects given in Table P7.11. (a) Classify each project as either simple or nonsimple. (b) Identify all positive i*s for each project.
Your division is considering two investment projects, each of which requires an up-front expenditure of $25 million. You estimate that the cost of capital is 10 percent and that the investments will produce the following after-tax cash flows (in millions of dollars): Year 1 2 3 4 Project A 5 10 15 20 Project B 20 10 8 6 a. What is the regular payback period for each of the projects?
Question 6. You are asked to evaluate a mining project with costs in the developmental stage followed by benefits in the production stage and ending with significant costs at the end of the study period for reclamation of the land to its original state. You have determined that the project has two positive IRRs. a. Summarize a strategy for modifying the CB C cash flow pattern into a simpler CB cash flow pattern with just one IRR solution and a straightforward decision rule. b. Ilustrate your strategy with the following example: Capital cost at t-0 is $70 million; Constant benefits of $40 million in years 1-5; Year 6 reclamation cost of S140 million; Appropriate MARR = 20%. Set up the cash flow diagram, but do not solve for IRR.
Assume the relationship between the growth of a fish population and the population size can be represented as g= 8S – 0.2S2, where g is the growth in tons and S is the size of the population (in thousands of tons) a. Given a price of $100 a ton of fish, what is the marginal benefit of smaller population sizes? b. Estimate the population size that is compatible with the maximum sustainable yield. What would be the size of the annual catch if the population were to be sustained at this level? c. If the marginal cost of additional catches (represented in terms of the population size) is MC= 3(120-S), what is the population size that is compatible with the efficient sustainable yield? d. Is there a difference between the maximum sustainable yield you calculated in part (b) and the efficient sustainable yield in part (c)? Why or why not? Explain briefly (in 1 paragraph or less)
ECONOMICS (UPVOTE WILL BE GIVEN. PLEASE WRITE THE COMPLETE SOLUTIONS. NO LONG EXPLANATION NEEDED. BOX THE FINAL ANSWER.) A high-tech material handling system was offered by a supplier to a large automobile manufacturer. The installation cost of the system is worth Php 1,000,300,000. This system will save Php 214,000,000 per year in manual labor, and it will incur Php 93,000,000 in annual operating and maintenance expenditures. The salvage value at the end of the system’s 10-year life is negligible. If the company’s hurdle rate (MARR) is 10% per year, should the system be recommended for implementation? determine the following: a. Enumerate all the cash inflows in the problem. Classify the cash inflow if it is in its present value, future value, or annual value. b. Enumerate all the cash outflows in the problem. Classify the cash outflow if it is in its present value, future value, or annual value.
Which of the below statements regarding alternative (renewable) energy sources such as solar, wind, nuclear, biomass, geothermal, and hydropower, is NOT CORRECT based on current available research and data? Group of answer choices The development of alternative energy sources has resulted in new employment opportunities. Improvements in technology has significantly lowered the cost of producing alternative (renewable) energy. Alternative (renewable) energy result in cleaner air, less pollution, and possibly even less global warming and climate change. By the year 2030 alternative energy will have amost completely replaced fossil fuels (coal, oil and natural gas) as the energy source used for global production.
Suppose you have been appointed as afinancial advisor for an upcoming business in Oman which requires OMR 90,000 as Capital. Your job is to organize the finance required for the company from different types of available finance. Explain in detail how much amount of funds you will take from each type of finance source and why. Discuss in detail which type of finance is good for the company. Note / solve it by using the Financial Institutions & Services course for marketing purposes
The Salar de Uyuni basin in Bolivia contains one of the world's largest deposits of lithium. However, this basin can also be used to grow quinoa, one of the region's most important crops, and is the site of considerable tourism. A study estimated the value of mining lithium from this basin to be worth $380 million, quinoa farming to be worth $11 million, and tourism to be worth $27 million. Assume that if the basin is mined that it cannot be used for farming or tourism. The opportunity cost of mining the basin is _____, and (based on these numbers) Bolivia _____ mine for lithium here. -$11 million; should -$38 million; should -$27 million; should -$418 million; should not