A project costs 10 this year, has a benefit of 5 this year, and has a...
A project costs 10 this year, has a benefit of 5 this year, and has a benefit of 6 next year.
(a) Assuming that the interest rate is r= 1, what is the present value (sum of the dis-counted benefits minus costs) of the project?
(b) For what value of interest rater, the present value of the project will be exactly equal to zero?
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A project costs 10 this year, has a benefit of 5 this year, and
has a...
A project costs 10 this year, has a benefit of 5 this year, and has a...
A project costs 10 this year, has a benefit of 5 this year, and has a benefit of 6 next year. (a) Assuming that the interest rate is r= 1, what is the present value (sum of the dis- counted benefits minus costs) of the project? (b) For what value of interest rate r, the present value of the project will be exactly equal to zero?
Problem 2: Cost-benefit Analysis. A project costs 10 this ycar, has a benefit of 5 this...
Problem 2: Cost-benefit Analysis. A project costs 10 this ycar, has a benefit of 5 this ycar, and has a bencfit of 6 next ycar. (a) Assuming that the interest rate is r , what is the present value (sum of the dis- counted benefits minus costs) of the project? (b) For what value of interest rate r, the present value of the project will be exactly equal to zero?
1.2. Assume you need to evaluate an ecotouristic project. Each year the project requires maintenance costs...
1.2.
Assume you need to evaluate an ecotouristic project. Each year the project requires maintenance costs equal to $200 and you have benefits (income) of $500. Except for the first year when you invest $1,000 and you have zero income. The market interest rate is 5% What is the Net Present Value of this project? YEAR 1 INTEREST RATE 5% COSTS BENEFITS 1000 10 200 500 200 500 500 200 500 200 Assume you have certified coffee plantation project. Each...
A project yields an annual benefit of $25 a year, starting next year and continuing forever....
A project yields an annual benefit of $25 a year, starting next year and continuing forever. What is the present value of the benefits if the interest rate is 10%?
3. Suppose a project under consideration has the following stream of benefits and costs. Year O...
3. Suppose a project under consideration has the following stream of benefits and costs. Year O Costs $10,000 Benefits 4 S5,000 $2,000S4,000 S6,000 $8,000 S10,000 $2,000 (a) Find the net present value of the project assuming a discount rate of 5%. Is the project worthwhile? (b) Suppose you have discovered that the benefits of the project have been overestimated and a more accurate assessment suggests that the benefit in each year is half of the original estimate. Assuming a discount...
2. The government is contemplating project A that yields the following stream of benefits and costs....
2. The government is contemplating project A that yields the following stream of benefits and costs. Project A Year 2 S10,0000 0 Benefits0 $2,000 $4,000 $6,000 (a) Find the net present value and the benefit cost ratio for this project, assuming a discount rate of 5%. (b) Re-calculate the net present value assuming a discount rate of (i) 3%, (ii) 8 % and (iii) 10%. Use a graph to illustrate how the net present value of the project is affected...
Problem 1 Implementing an e-commerce website has a projected net economic benefit of $ 40,000/year during...
Problem 1 Implementing an e-commerce website has a projected net economic benefit of $ 40,000/year during the next five years. The recurring costs of this project are $ 10,000/year, and the initial cost of implementing the website is $ 50,000. Assuming that 10 percent is the estimated discount rate, do the following: Calculate the net present value of these costs and benefits Calculate the overall return on investment Perform a break-even analysis and estimate when the actual break-even occurs Generate...
The table below presents the stream of costs and benefits for a resource development project. Use...
The table below presents the stream of costs and benefits for a resource development project. Use the table below to answer the following questions Year Benefits Costs 0 0 60 2 30 60 100 What is the net present value of the benefits at an interest rate of 5%? a. 118.75 b. 123.8:1 c. 119.217 d. 123.5 e. none of the above What is the net present value of the costs at an interest rate of 5%? a. 120 b....
(6) THINKING ABOUT COST-BENEFIT ANALYSIS. When evaluating how much to invest on a project the typical...
(6) THINKING ABOUT COST-BENEFIT ANALYSIS. When evaluating how much to invest on a project the typical Present Value (PV) formula is used where R is the discount rate, Bt is the benefit, and Ct is cost the associated with the project in year t, and n is the number of years associated with the project a. What is the PV of $1 today? In one year (say March 30, 2017), what is the PV of $1 at b. Suppose that...
Benefit-Cost Analysis Table Road Project Analysis Government XYZ is considering the addition of a tool road...
Benefit-Cost Analysis Table Road Project Analysis Government XYZ is considering the addition of a tool road segment to the regional road system. The projected costs and benefits for it has been estimated and converted into monetary units. The resulting data is outlined in the Table below. Furthermore, the discount rate has been determined to be 7% based on the entity’s weighted average cost of capital (WACC). Based on a benefit-cost analysis, determine whether this “pilot project” will provide a net...
Problem 2: Cost-benefit Analysis. A project costs 10 this ycar, has a benefit of 5 this ycar, and has a bencfit of 6 next ycar. (a) Assuming that the interest rate is r , what is the present value (sum of the dis- counted benefits minus costs) of the project? (b) For what value of interest rate r, the present value of the project will be exactly equal to zero?
1.2.
Assume you need to evaluate an ecotouristic project. Each year the project requires maintenance costs equal to $200 and you have benefits (income) of $500. Except for the first year when you invest $1,000 and you have zero income. The market interest rate is 5% What is the Net Present Value of this project? YEAR 1 INTEREST RATE 5% COSTS BENEFITS 1000 10 200 500 200 500 500 200 500 200 Assume you have certified coffee plantation project. Each...
3. Suppose a project under consideration has the following stream of benefits and costs. Year O Costs $10,000 Benefits 4 S5,000 $2,000S4,000 S6,000 $8,000 S10,000 $2,000 (a) Find the net present value of the project assuming a discount rate of 5%. Is the project worthwhile? (b) Suppose you have discovered that the benefits of the project have been overestimated and a more accurate assessment suggests that the benefit in each year is half of the original estimate. Assuming a discount...
2. The government is contemplating project A that yields the following stream of benefits and costs. Project A Year 2 S10,0000 0 Benefits0 $2,000 $4,000 $6,000 (a) Find the net present value and the benefit cost ratio for this project, assuming a discount rate of 5%. (b) Re-calculate the net present value assuming a discount rate of (i) 3%, (ii) 8 % and (iii) 10%. Use a graph to illustrate how the net present value of the project is affected...
The table below presents the stream of costs and benefits for a resource development project. Use the table below to answer the following questions Year Benefits Costs 0 0 60 2 30 60 100 What is the net present value of the benefits at an interest rate of 5%? a. 118.75 b. 123.8:1 c. 119.217 d. 123.5 e. none of the above What is the net present value of the costs at an interest rate of 5%? a. 120 b....
(6) THINKING ABOUT COST-BENEFIT ANALYSIS. When evaluating how much to invest on a project the typical Present Value (PV) formula is used where R is the discount rate, Bt is the benefit, and Ct is cost the associated with the project in year t, and n is the number of years associated with the project a. What is the PV of $1 today? In one year (say March 30, 2017), what is the PV of $1 at b. Suppose that...
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