What is the present value of the parking revenue

Assignment Help Finance Basics

Reference no: EM132031219

Question: 1. The city of Newport Beach gave up its rights to collect parking fees over a 30-year period in exchange for a lump sum of $92 million plus a 30-year annuity of $3 million. Suppose that if the city had not entered into that arrangement, it would have collected parking fees the following year of $6 million (net of operating costs), and those fees would have grown at a steady 4% for the next 30 years. At an interest rate of 4%, what is the present value of the parking revenue that the city could have collected? Using the same 4% to value the deal above. Do you think the city made the correct decision? Why or why not?

Reference no: EM132031219

Questions Cloud

What is the most you would be willing to pay : Pegasus Inc. wants to estimate the present value of project X. All production and sales take place one year from now, and there is no option to shut down.

Cash flow from investments in plant and equipment : Cash flow from investments in plant and equipment – capital investment. Cash flow from investment in working capital 3. Cash flow from operations

Grandson college education : Hector and Yolanda want to establish a fund for their? grandson's college education. What lump sum must they deposit at a 10.7?% annual interest? rate

How different the payback period method utilize : The Payback Period could be computed using the Simple Payback or the Discounted Payback methods, in your opinion which do you think is better to use.

What is the present value of the parking revenue : The city of Newport Beach gave up its rights to collect parking fees over a 30-year period in exchange for a lump sum of $92 million plus a 30-year annuity.

What is the company degree of operating leverage : Chihuahua Cheese, Inc.'s Degree of Total Leverage (DTL) is 2.28 and its Degree of Financial Leverage (DFL) is 1.45. What is the company's Degree

Risk and the return on any long-term investment : Describe the relationship between the risk and the return on any long-term investment.

What coupon rate should the company set : Pembroke Co. wants to issue new 20-year bonds for some much-needed expansion projects. The company currently has 7 percent coupon bonds on the market.

Analyst in the corporate finance department of publicly : You are an analyst in the corporate finance department of publicly listed communications technology manuacturing company.

User Account

All Pages