Suppose a project will result in an economic benefit of $20 million dollars 25 years from...
Suppose a project will result in an economic benefit of $20 million dollars 25 years from now. If the discount rate is 3%, what will be the present value of the benefits of this project?
a. $12 million
b. $0.82 million
c. $323.65 million
d. $9.55 million
e. $38.65 million
Homework Answers
Ans: d) $9.55 million
Explanation:
Future benefit ( F ) = $20 million
Discount rate ( i ) = 3%
Number of interest period ( n ) = 25
Present worth = F ( P /F , i , n )
= $20 million ( P /F , 3% , 25 )
= $20 million * 0.4776
=$9.552 or $9.55 million
Add Answer to:
Suppose a project will result in an economic benefit of $20
million dollars 25 years from...
(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...
Look at the table below with benefits and costs of a proposed project over 3 years....
Look at the table below with
benefits and costs of a proposed project over 3 years.
What’s the net present value of the project assuming a 5% discount
rate?
Look at the table below with benefits and costs of a proposed project over 3 years. Year Benefits Costs / 1 2 125 150 250 75 25 3 / 100 / What's the net present value of the project assuming a 5% discount rate? Select one: O a. -$10.6 O b....
A proposed policy change is expected to result in a one-time $4 million savings, occurring in...
A proposed policy change is expected to result in a one-time $4 million savings, occurring in 10 years from today. Supposing that the discount rate is 13%, calculate the present value of this benefit (cost- savings). Report your answer in millions of dollars rounded to 2 decimal places. E.g. If you think the answer is $1.978 million, enter 1.98 Answer: Save response A proposed policy change is expected to reduce traffic congestion by 10% every year, beginning next year and...
2. Suppose investment for a project takes three years and it will operate for six years....
2. Suppose investment for a project takes three years and it will operate for six years. The discount rate and interest rate is 10%, and the inflation rate is zero. 1,000 5,000 5,000 year investment cost loan net benefits 4.000 4.000 4.000 4.000 4.000 4.000 a) Calculate the accrued capital cost. b) Calculate the interest during construction (or capitalized interest) if 20% of the invest- ment in each year is financed with borrowing. c) With straight line depreciation over six...
2. Suppose investment for a project takes three years and it will operate for six years....
2. Suppose investment for a project takes three years and it will operate for six years. The discount rate and interest rate is 10%, and the inflation rate is zero. 1,000 5,000 5,000 year investment cost loan net benefits 4.000 4.000 4.000 4.000 4.000 4.000 a) Calculate the accrued capital cost. b) Calculate the interest during construction (or capitalized interest) if 20% of the invest- ment in each year is financed with borrowing. c) With straight line depreciation over six...
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...
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%?
A cost-benefit analysis of an irrigation project shows that the ratio of the discounted present value...
A cost-benefit analysis of an irrigation project shows that the ratio of the discounted present value of benefits to costs is less than one. This implies that: a. the net benefit of the project is positive. b. the net benefit of the project is negative efficiency can be attained by undertaking the project. d. the project will redistribute income to the poor. QUESTION 6 A lower discount rate favors more capital-intensive investments that yield net benefits further into the future....
1. Suppose a university has an opportunity to build a solar facility just outside of the...
1. Suppose a university has an opportunity to build a solar facility just outside of the city that would generate about 120,000 MWh per year (1 MWh = 1000 KWh), and cost $25 million to install. To determine if this is a good deal for the university, you need to analyze the economics. Assume the market price for electricity over the next five years is $48 per MWh and there is a 5-year project horizon. Evaluate this decision using a...
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...
(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...
Look at the table below with
benefits and costs of a proposed project over 3 years.
What’s the net present value of the project assuming a 5% discount
rate?
Look at the table below with benefits and costs of a proposed project over 3 years. Year Benefits Costs / 1 2 125 150 250 75 25 3 / 100 / What's the net present value of the project assuming a 5% discount rate? Select one: O a. -$10.6 O b....
A proposed policy change is expected to result in a one-time $4 million savings, occurring in 10 years from today. Supposing that the discount rate is 13%, calculate the present value of this benefit (cost- savings). Report your answer in millions of dollars rounded to 2 decimal places. E.g. If you think the answer is $1.978 million, enter 1.98 Answer: Save response A proposed policy change is expected to reduce traffic congestion by 10% every year, beginning next year and...
2. Suppose investment for a project takes three years and it will operate for six years. The discount rate and interest rate is 10%, and the inflation rate is zero. 1,000 5,000 5,000 year investment cost loan net benefits 4.000 4.000 4.000 4.000 4.000 4.000 a) Calculate the accrued capital cost. b) Calculate the interest during construction (or capitalized interest) if 20% of the invest- ment in each year is financed with borrowing. c) With straight line depreciation over six...
2. Suppose investment for a project takes three years and it will operate for six years. The discount rate and interest rate is 10%, and the inflation rate is zero. 1,000 5,000 5,000 year investment cost loan net benefits 4.000 4.000 4.000 4.000 4.000 4.000 a) Calculate the accrued capital cost. b) Calculate the interest during construction (or capitalized interest) if 20% of the invest- ment in each year is financed with borrowing. c) With straight line depreciation over six...
A cost-benefit analysis of an irrigation project shows that the ratio of the discounted present value of benefits to costs is less than one. This implies that: a. the net benefit of the project is positive. b. the net benefit of the project is negative efficiency can be attained by undertaking the project. d. the project will redistribute income to the poor. QUESTION 6 A lower discount rate favors more capital-intensive investments that yield net benefits further into the future....
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...
Most questions answered within 3 hours.
-
1. Choose the answer that is closest to the definition of a
significance level
a) If...
asked 39 minutes ago -
When light is refracted, on what does the angle of refraction
depend? Select all that apply....
asked 56 minutes ago -
A (726) g mass is hung on a spring. As a result the spring
stretches (16.5)...
asked 2 hours ago -
SOLUTION NOT NEEDED ONLY NEED THE ANSWERS, HOMEWORK IS DUE IN 30
MINUTES.
4)Which of the...
asked 2 hours ago -
You will select one card from a standard deck of 52 cards. What
is the probability...
asked 2 hours ago -
50% of the volume of a boat, sailing down the Mississippi (where
the water density ρ...
asked 3 hours ago -
Calculate how many moles of ions are in 1.4 L of 2.9 M KNO2
(aq). Remember...
asked 3 hours ago -
Experiment:
In the experiment: Mix together 74 g. (92 ml.) of n-butyl
alcohol and 120 g....
asked 4 hours ago -
This Python module will be menu driven
and use conditions to check user input in order...
asked 4 hours ago -
Tip Calculator App
For this project, you will create a tip calculator Android
app. The user...
asked 5 hours ago -
A first order chemical reaction has an energy of activation of
90.0 kJ/mol and a rate...
asked 6 hours ago -
Which statement is not correct?
Mutations change the sequence of nucleotides in DNA.
Mutations can be...
asked 8 hours ago