Reference no: EM131625170
You are a respected scientist who has the possibility to start working in Antarctica from the first day of 2017 (Year 0) on a project of exploration of strange animals.
In addition, you are concerned about your financial stability because you do not know with certainty that you can invest your salary. You receive a salary that annually represents a total of 20 MS (1MS = $ 737717 in 2017) and is expected
That this value grow by 4.2% annually. You are evaluating these three investment possibilities and you want to find the one that generates greater value at the time of your retirement:
The first is the investment in an Antarctic exploration project for the exploitation of oil. For this possibility the following conditions exist:
• Expenses: make an investment under the following payment scheme: 1) Pay half of your salary in year 2017 (Year 0); 2) From the year 2018 (Year 1) he makes payments corresponding to 35% of his salary until year 2026 (Year 9).
• Income: this is a value that corresponds to 45% of your salary in year 2018 (Year 1) and this value will grow at a rate of 1.5% per year from 2019 to the year 2029 (Year 12).
The second is to invest in an Environmental Sanctuary in which it seeks to preserve a small community of protected species. For this you must invest an amount that amounts to 30% of your annual salary from year 2017 (Year 0) until year 2022 (Year 5). According to Sanctuary projections, a return of $ 2.5MM is offered each year after the investment is made and this return is expected to grow by 1.1% E.A. Of perpetual form.
The third possibility of investment that is presented to you is to pay a cooperative made up of premises that are in charge of planting a variety of blackberries on the planet. You must invest a total of 15% of your salary per year during 2017 (Year 0), 2018 (Year 1) and 2019 (Year 2).
This generates an income of 28% on their salary for the year 2020 (Year 3) and grows (from year 2021) by $ 0.5 MM per year until year 2029 (year 12 ).
Use as an opportunity cost a rate of 2% E.A.
(A) Make the graph where the comparison of income and expenses is made for the possibility of oil exploration.
(B) Make the graph where the comparison of income and expenses for the possibility of the Environmental Sanctuary is made.
(C) Make the graph where the comparison of income and expenses for the possibility of to plant exotic blackberries. is made.
(D) What is the net profit generated in value for 2017 for the drilling of oil wells.
(E) What is the net profit generated in value for 2017 for the Environmental Sanctuary
(F) What is the net benefit generated in the value of 2017 for the cultivation of exotic blackberries.
(G) When you finish your employment contract in Antarctica in year 2029 (Year 12), a friend of yours proposes to buy you the Sanctuary for a value of $ 350 MM. Should you sell it?
(H) Now suppose that the exotic blackberries have had a low reception in the market and that their income will have a decreasing behavior from the year 2021 until the year 2029 of 3% per year. How does the value of the business change with respect to the literal C?