The net present value of the cost of quitting

Assignment Help Financial Management

Reference no: EM131617810

Tommy is 20 years old. If Tommy quits smoking today, he is expected to gain 10 years in life expectancy through reduced risk of lung cancer. However, that benefit is 50 years away, while the cost of quitting is experienced now. Tommy is quite impatient with a discount rate of 10%. Assuming Tommy places a disutility value of $10,000 on quitting smoking, conduct a cost-benefit analysis to determine whether quitting smoking is worth it to Tommy. The net present value of the benefits of quitting is $____________. The net present value of the cost of quitting is $_______________. The net benefit (benefit minus cost) is therefore $_____________.

Reference no: EM131617810

Questions Cloud

Amount of revenue the government raises : Consider how taxes affect economic well-being by comparing the reduced welfare of buyers and sellers to the amount of revenue the government raises.

Define and measure risks in financial projects : How do we define and measure risks in financial projects? What are examples of uses for sensitivity analysis and what-if scenarios?

What is the purpose of the auditors opinion and report : Reporting Principle. The reporting principle requires auditors to express their opinion through the issuance of a written report.

Dollar price of euros determine : Cite a factor that might increase the dollar price of euros. Cite a different factor that might decrease the dollar price of euros.

The net present value of the cost of quitting : The net present value of the benefits of quitting, The net present value of the cost of quitting

Identify the study by title and authors : Identify the study by title and authors, Associate the chosen study with a specific research area of psychology based on the information on research area

Slope parameters of the demand function : Interpret the intercept and slope parameters of the demand function derived in part a.

Calculate sale value-break-even npv of keeping the machine : Calculate the sale value, X, that can break-even the NPV of keeping the machine. Consider 40% income tax rate and after-tax minimum ROR of 18%.

Explain importance when developing an elevator speech : Then, rank the following factors in order of importance when developing an elevator speech, and provide a rationale for your response.

User Account

All Pages