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A cost-benefit analysis of an irrigation project shows that the ratio of the discounted present value...
(i) Project cost-benefit analysis (ii) Private cost-benefit analysis (iii) efficiency cost-benefit analysis (iv) Aggregate cost-benefit analysis...
(i) Project cost-benefit analysis
(ii) Private cost-benefit analysis
(iii) efficiency cost-benefit analysis
(iv) Aggregate cost-benefit analysis
A firm based in and owned by investors in Northern province is considering a project in nearby Southern province that has discounted net benefits and costs, at market prices before tax, of $10,000 and $7,000 respectively. (Included in these costs are wages of $4,000.) If the project goes ahead, company tax with a present value of $2,000 will be paid to the government of...
In a recent benefit-cost analysis of a proposed regulation that generated positive net benefits in the...
In a recent benefit-cost analysis of a proposed regulation that generated positive net benefits in the present but negative net benefits in the future, the government used a 5% social discount rate. If it had instead used a 4% social discount rate, the net present value of the policy would have been ______; if it had used a 6% social discount rate, the net present value would have been ______. Select one: a. higher; higher. b. higher; lower. c. lower;...
In a recent benefit-cost analysis of a proposed regulation that generated positive net benefits in the...
In a recent benefit-cost analysis of a proposed regulation that generated positive net benefits in the present but negative net benefits in the future, the government used a 7% social discount rate. If it had instead used a 8% social discount rate, the present value of the policy's net benefits would have been : present value of the policy's net benefits would have been ; if it had used a 6% social discount rate, the A) Lower; lower B) Lower;...
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...
Why must future net benefits be discounted in a cost-benefit analysis? Define social rate of discount in your own words....
Why must future net benefits be discounted in a cost-benefit analysis? Define social rate of discount in your own words. What are some of the difficulties in choosing an appropriate social rate of discount? How does the discount rate affect the net benefits and the ranking of public projects?
2. Preform a benefit/cost analysis on the following project: Expected costs: $5,000 today, $6,000 a year...
2. Preform a benefit/cost analysis on the following project: Expected costs: $5,000 today, $6,000 a year from today, and $5,000 two years from today Expected revenue: $7,000 five years from today, $6,000 seven years from today, and $8,000 ten years from today. Assume a 5% discount rate Find: a. The Net Present Value (NPV) of the project b. The benefit/cost ratio c. Is the project worth undertaking?
Name 4) Fill in the following table to caloulate the net present vallue and benefit/cost ratio...
Name 4) Fill in the following table to caloulate the net present vallue and benefit/cost ratio of each investment. Round to the nearest dollar or hundredth in the benefit/cost ratio. Investment B Investment A Yearly After-tax Yearly Present After-tax Present After-tax After-tax Present Value Year Value Present Value Year Value x of Benefits of Benefits Benefit Benefit Factor Factor 3200 1850 2 1925 2 3200 2567 3200 3 4 3850 3000 3000 3850 Total 6 5133 Less Initial Cost 7...
Un chat the mill would be willing to accept? Exercise 3: Benefit/cost analysis, NPV, option value...
Un chat the mill would be willing to accept? Exercise 3: Benefit/cost analysis, NPV, option value The town of Dryville is considering building a dam in order to provide irrigation water during droughts. If they build the dam this year (year 0) they expect it to provide benefits of $800 in years 0, 1, 2, 3, 4, and 5. After year 5, the dam will be worn out and need to be replaced. 1. What is the net present value...
Problems – Find the Net Present Value and Benefit Cost Ratio for the following: 1.An investment...
Problems – Find the Net Present Value and Benefit Cost Ratio for the following: 1.An investment in new software is expected to have the following cash flows over a three-year period. The discount rate is 12 percent? Year Cash Flow 0 -$28,900 1 $12,450 2 $19,630 3 $ 2,750 A layoff is expected to have an immediate restructuring charge of $7,500 and save money for the firm according to the schedule below. The firm’s weighted average cost of capital is...
Which of the following statements is TRUE of a cost-benefit analysis of a potential government project?...
Which of the following statements is TRUE of a cost-benefit analysis of a potential government project? a. Neither asset value increases to the property owners nor income increases to the property owners should be counted. b. Future costs and benefits should be discounted to present values before being compared. C. The net increase in jobs in a community is a benefit d. Both asset value increases to the property owners and income increases to the property owners should be counted....
(i) Project cost-benefit analysis
(ii) Private cost-benefit analysis
(iii) efficiency cost-benefit analysis
(iv) Aggregate cost-benefit analysis
A firm based in and owned by investors in Northern province is considering a project in nearby Southern province that has discounted net benefits and costs, at market prices before tax, of $10,000 and $7,000 respectively. (Included in these costs are wages of $4,000.) If the project goes ahead, company tax with a present value of $2,000 will be paid to the government of...
In a recent benefit-cost analysis of a proposed regulation that generated positive net benefits in the present but negative net benefits in the future, the government used a 7% social discount rate. If it had instead used a 8% social discount rate, the present value of the policy's net benefits would have been : present value of the policy's net benefits would have been ; if it had used a 6% social discount rate, the A) Lower; lower B) Lower;...
2. Preform a benefit/cost analysis on the following project: Expected costs: $5,000 today, $6,000 a year from today, and $5,000 two years from today Expected revenue: $7,000 five years from today, $6,000 seven years from today, and $8,000 ten years from today. Assume a 5% discount rate Find: a. The Net Present Value (NPV) of the project b. The benefit/cost ratio c. Is the project worth undertaking?
Name 4) Fill in the following table to caloulate the net present vallue and benefit/cost ratio of each investment. Round to the nearest dollar or hundredth in the benefit/cost ratio. Investment B Investment A Yearly After-tax Yearly Present After-tax Present After-tax After-tax Present Value Year Value Present Value Year Value x of Benefits of Benefits Benefit Benefit Factor Factor 3200 1850 2 1925 2 3200 2567 3200 3 4 3850 3000 3000 3850 Total 6 5133 Less Initial Cost 7...
Un chat the mill would be willing to accept? Exercise 3: Benefit/cost analysis, NPV, option value The town of Dryville is considering building a dam in order to provide irrigation water during droughts. If they build the dam this year (year 0) they expect it to provide benefits of $800 in years 0, 1, 2, 3, 4, and 5. After year 5, the dam will be worn out and need to be replaced. 1. What is the net present value...
Which of the following statements is TRUE of a cost-benefit analysis of a potential government project? a. Neither asset value increases to the property owners nor income increases to the property owners should be counted. b. Future costs and benefits should be discounted to present values before being compared. C. The net increase in jobs in a community is a benefit d. Both asset value increases to the property owners and income increases to the property owners should be counted....
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