What is the present value of the returns to building the dam

Assignment Help Business Economics

Reference no: EM13869320

A state government has the option of damming a major river to generate energy and divert water to local agriculture. The cost of constructing the dam and associated infrastructure is 100 million. The value of the energy generated and the water is 10 million per year forever. There are, however, losses to ecosystem services associated with damming. These environmental costs amount to 6 million a year forever. The interest rate: i = 0.05.

(a) What is the present value of the returns to building the dam? (b) What is the present value of the costs (construction and environmental) to building the dam? (c) Should the state government build the dam?

Reference no: EM13869320

Questions Cloud

At the peak of the financial crisis : At the peak of the financial crisis, you had lost 40% of your stock holdings, leaving you with stocks with $10,000. You asked your family for advice on what to do with your money. If you decided to follow your mother’s advice, what is the opportunity..

Values and norms of islam that is hostile business : Can you see anything in the values and norms of Islam that is hostile business?' what does the experience of the region around Kayseri teach about the relationship between Islam and business?

Now for new fountains and plumbing : The water fountains in Learned Hall are costing $1200 a year to maintain. How much money can you justify spending NOW for new fountains and plumbing (materials and labor combined) if no maintenance will be needed for the first 3 years, $200 a year fo..

What will be the aggregate demand for clean air : Now suppose instead of consuming pizza, Ann and Bob are choosing how much clean air to consume. What will be the aggregate demand for clean air? Suppose the constant marginal cost of clean air is $6, if Ann and Bob individually choose how much clean ..

What is the present value of the returns to building the dam : A state government has the option of damming a major river to generate energy and divert water to local agriculture. The cost of constructing the dam and associated infrastructure is 100 million. What is the present value of the returns to building t..

Find the profit maximizing levels of capital and labor : A price taking firm chooses its inputs to maximize long-run profits. Labor and capital are substitutes in production and both exhibit decreasing returns to scale, q(L, K) = L^(1/2) + K^(1/2) . The output price is 100 and the price of each of the inpu..

The appropriation other program costs covers vacation : The appropriation Other program costs covers vacation pay pension and retiree health care benefits and all other program expenditures The city uses the purchases method to record the acquisition of supplies. The year end supplies inventory is consi..

The assigned fund balance at the beginning : The Assigned fund balance at the beginning of the year represented outstanding encumbrances that were allowed to lapse at year end The purchase orders that had been encumbered will be honored and charged against 2013 appropriations.

A property owner is withholding payment of property taxes : A property owner is withholding payment of property taxes pending appeal of the assessed valuation of the property for the current year. The city attorney believes the appeal will be denied. However the appeal action means that property taxes that..

User Account

All Pages