The state's fish and game department has a capi- tal budget of $9 million. What is the government's opportunity cost of capital if it has the following projects to consider? What does this indicate about which projects should be recommended? First Rate of B/C Ratio Project Cost Return (%) at 7% $2,000,000 9. 1.23 1,000,000 14 1.42 2,000,000 10 1.17 3,000,000 16 1.45 2,000,000 13 1.56 3,000,000 15 1.35 3,000,000 12 1.32 1,000,000 11 1.26 4BCD EEGH

The state's fish and game department has a capi- tal budget of $9 million. What is the government's opportunity cost of capital if it has the following projects to consider? What does this indicate about which projects should be recommended? First Rate of B/C Ratio Project Cost Return (%) at 7% $2,000,000 9. 1.23 1,000,000 14 1.42 2,000,000 10 1.17 3,000,000 16 1.45 2,000,000 13 1.56 3,000,000 15 1.35 3,000,000 12 1.32 1,000,000 11 1.26 4BCD EEGH

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter5: Investment Decisions: Look Ahead And Reason Back

Section: Chapter Questions

Problem 5.4IP

See similar textbooks

Similar questions

A local government is considering promoting tourism in the city. It will cost$8,000 to develop a plan.111e anticipated annual benefits and costs are as follows:Annual benefits: Increased local income and tax collections $ 125,000Annual support service: Parking lot expansion, restroom. $50,000the patrol car, and street repairIf the city government uses a discount rate of 8% and a study period of fiveyears. is this tourism project justifiable according to the benefit-cost analysis?
Million Yuan Warehouses has a cost of equity capital of 10.5%, existing bonds with yield to maturity of 5%, and the corporate tax rate is 21%. If the firm's D/E ratio is 0.46, what is the firm's WACC? A. 8.95% B. 8.44% C. 9.55%
13.12 You work for Bellevue Window Products. While performing an analysis for a new window prod- uct, you found a report from last year that pro- vided the following information regarding the manufacture of a similar product: annual produc- tion rate T 40,000 units; selling price = $70 per unit; fixed production cost = $240,000 per year; variable production cost = $1,700,000 per year; variable selling expenses = $96,000 per year. As a first-cut, you decide to use this information to estimate (a) the breakeven production rate per year, (b) the company's profit last year, and (c) the annual production rate that would generate a profit of $1,000,000 per year. What are your estimates?
I want you to provide me the Cash Flow diagram of the problem. Only cash flow diagram, the solution is already there. Thanks in advance! The annual estimated cash flow is $140,000. The salvage value will be 12% of the initial price after 5 years. The discount rate (r) is 18% Let us assume the initial price of the doughnut machine be X. PV of cash inflows=PV of cash outflows$140,000×PVAF4,18%+.12X×PVF5,18%=X$140,000×2.69006180465+.12X×0.43710921621=X$376,608.652651=X-0.05245310594$376,608.652651=0.94754689406XX=$397,456.479475 The maximum purchase price of the doughnut machine is $397,456.48.
(1) Given that the benefit/cost ratio for project X is B/C(X) and that of higher ranked project Y is B/C(Y), then project Y will be preferred over X if the incremental benefit/cost ratio is greater than A. B/C(X) OB. B/C(Y) OC. One OD. Zero OE. MARR (2) Given that the internal rate of return for project X is IRR(X) and that of higher ranked project Y is IRR(Y), then project Y will be preferred over X if the incremental rate of return is greater than A. MARR OB. One OC. IRR(Y) OD. Zero OE. IRR(X)
In the development of a publicly owned, commercial waterfront area, three possible independent plans are being considered. Their estimated costs and estimated benefits are as follows. Increment considered Incremental A (A-C) A (B-A) Plan A B $123,000 135,000 99,000 12000 Costs 24000 costs Benefits $ 139,000 150,000 114,000 Incremental 25000 11000 Benefits В-С 1.13 1.11 1.15 A (B C) 1.04 0.916 which plan should be selected? O A O Do nothing O B
A hotel's CPOR is $45.00. The hotel's highest cost distribution channel, on average, consists of a 22% third-party commission and the hotel pays an additional 3% franchise fee on all room revenue. What would be this hotel's average minimum ADR sales point? O $60.00 O $65.00 O $50.00 O $ 55.00
A local government is considering promoting to urism in the city. It will cost$8,000 to develop a plan. The anticipated annual benefits and costs are as follows:Annual benefits: Increased local income and tax collections $ 125,000Annual support service: Parking lot expansion, rest room. $50,000patrol car, and street repairIf the city government uses a discount rate of 8% and a study period of fiveyears. is this tourism project justifiable according to the benefit-cost analysis?
4. Using the incremental B / C analysis (∆B/C). Determine the best alternative.5. Using the incremental rate of return (∆RoR) analysis. Determine the best alternative. MARR =10%. A B C DFirst cost 45,000 $25,000 $35,000 $15,000O &M Cost/year $4,000 $1,500 $3,000 $2,000Benefit/year $15,000 $9,500 $14,000 $8,000Salvage value $9,000 $5,000 $7,000 $3,000Life in years 10
Incremental cash flow = cash flowB- cash flowA , where larger initial investment is Alternative: О a. А O b. DN Oc. B All of the following are usually associated with public secter projects except: O a. Funding from taxes O b. Disbenefits O c. Profit O d. Infinite life EN
The following data is provided for a PPP project. Benefits Disbenefits To the People $150,000 per year beginning now $30,000 per year S7.4.b - Benefit/Cost Analysis of a Single Project The modified B/C ratio is Cost Savings Calculate the modified benefit/cost ratios using an interest rate of 7% per year and an infinite project period. To the Government $1.8 million now and $200,000 every 3 years $80,000 per year
During a a company history of cash flow: Y1, Income $6850: costs $19333, Y2 $6404; costs $14498 Y3 income $17620; costs $2126 with a hurdle rate of 0.15, what is the NPV at year 3? Please solve clearly ASAP.