Question

how to calculate npv. subject is about economics

Problem Set 1. Discount rates Project 1. Marine Park Years 1 2 3 4 5 6 7 8 9 10 Costs (thousands of $) Construction Recurring costs 1250 130 130 130 130 130 130 130 130 120 720 1700 130 130 130 130 Foregone recreation 20 20 20 20 20 201 20 20 20 20 20 20 Benefits Increased tourist revenue 300 300 300 300 300 300 300 300 300 300 Net NPV @ 5% NPV @ 10% Project 2. Coral Mining Costs (thousands of $) Extraction costs Costs of coastal erosion 3000 200 200 200 200 200 200 200 200 200 200 200 4500 Benefits Revenues from limestone Net NPV @ 5% NPV @ 10%

Answer 1

PROJECT 1 : MARINE PARK

Years 0 1 2 3 4 5 6 7 8 9 10 1250 20 130 20 130 20 130 20 130 20 130 20 130 20 130 20 130 20 130 20 130 20 Costs (thousands of $) Construction Recurring costs Foregone recreation Benefits Increased tourist revenue Net NPV @ 5 188.26 NPV @ 10 48.31 Continuous r NPV @ 5 181.14 NPV @ 10 -68.44 300 300 300 -970 150 150 -970 142.86 136.05 -970 136.36 123.97 300 300 300 300 300 300 300 150 150 150 150 150 150 150 129.58 123.41 117.53 111.93 106.6 101.53 96.691 112.7 102.45 93.138 84.671 76.974 69.976 63.615 300 150 92.087 57.831 -970 142.68 135.73 129.11 122.81 116.82 111.12 105.7 100.55 95.644 90.98 -970 135.73 122.81 111.12 100.55 90.98 82.322 74.488 67.399 60.985 55.182

PROJECT 2 : CORAL MINING

Years 0 1 2 3 4 5 6 7 8 9 10 3000 200 200 200 200 200 200 200 200 200 200 200 Costs (thousands of $) Extraction costs Costs of coastal erosion Benefits Revenues from limestone Net NPV @ 5 -244.35 NPV @ 10 71.09 Continuous r NPV @ 5 -234.86 NPV @ 10 97.92 4500 1300 1300 1300 -200 -200 -200 -200 -190.5 -181.4 -172.8 -164.5 -181.8 -165.3 -150.3 -136.6 -200 -200 -200 -200 -200 -200 -156.7 -149.2 -142.1 -135.4 -128.9 -122.8 -124.2 -112.9 -102.6 -93.3 -84.82 -77.11 1300 -190.2 -181 -172.1 -163.7 -155.8 –148.2 -140.9 -134.1 -127.5 -121.3 1300 -181 -163.7 -148.2 -134.1 -121.3 -109.8 -99.32 -89.87 -81.31 -73.58 1200