The government is considering building more parking spaces at a popular beach so that more people can use the beach. Use a 9% discount rate and a 50 year time period. If they do so, they will have to pay $280,000 immediately (t = 0) to build the parking spaces, and then $11,000 per year for maintenance (t = 1, ..., 49). Aggregate demand per year for visiting the beach is given by P = 53 - 0.008Q. Currently with the smaller number of parking spaces only 3200 people can visit per year, but when the new parking spaces are complete 5100 people will be able to visit per year (t = 1, ..., 49). Calculate the net present value of building the extra parking spaces. Remember to maintain several significant digits for your calculation process. For your final answer you can round up to two numbers after the decimal. Answer:
The government is considering building more parking spaces at a popular beach so that more people can use the beach. Use a 9% discount rate and a 50 year time period. If they do so, they will have to pay $280,000 immediately (t = 0) to build the parking spaces, and then $11,000 per year for maintenance (t = 1, ..., 49). Aggregate demand per year for visiting the beach is given by P = 53 - 0.008Q. Currently with the smaller number of parking spaces only 3200 people can visit per year, but when the new parking spaces are complete 5100 people will be able to visit per year (t = 1, ..., 49). Calculate the net present value of building the extra parking spaces. Remember to maintain several significant digits for your calculation process. For your final answer you can round up to two numbers after the decimal. Answer:
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:The government is considering building more parking spaces at a popular beach so that more people can use the beach.
Use a 9% discount rate and a 50 year time period.
If they do so, they will have to pay $280,000 immediately (t = 0) to build the parking spaces, and then $11,000 per year for maintenance (t = 1, ..., 49).
Aggregate demand per year for visiting the beach is given by P = 53 - 0.008Q. Currently with the smaller number of parking spaces only 3200 people
can visit per year, but when the new parking spaces are complete 5100 people will be able to visit per year (t = 1, ..., 49).
Calculate the net present value of building the extra parking spaces.
Remember to maintain several significant digits for your calculation process.
For your final answer you can round up to two numbers after the decimal.
Answer:
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