Calculate the net present value and efficiency , Cost Accounting

Assignment Help:

A foreign company plans to clear several dozen acres of ecologically valuable mangrove swamp in Vietnam for the creation of a shrimp aquaculture facility. This decision will create economic profits of $5000/year to the company (which hires substantial numbers of local villagers) after one year of construction but will cost $10,000 (paid upfront) to build. In addition, the loss of the mangrove habitat will reduce spawning and nursery habitat for valuable fish species - thus reducing the catch of fish by artisanal fishermen from 1000 tons to 750 tons per year (which has a market value, after costs, of $10/ton). Assume that these losses are experienced from the very first (construction) year onward and are permanent.

a. Assume that the discount rate is 5% (r=.05) and the evaluation horizon is 10 years from the present. Please neatly fill the blanks in the table below.

b. What is the net present value of this proposed project? If efficiency was the only objective for making the decision and we have fully accounted for all costs and benefits would you recommend the project go ahead or not?

c. Would the demonstration of a $.50 per family average willingness to pay for the preservation of the mangrove habitat on the part of middle to upper-class families in developed countries change your perception of the efficiency of this project? (Yes/no and why?). HINT: Based on very simple research you can conduct online, to a rough order of magnitude how many middle/upper-class families are there?

 


Related Discussions:- Calculate the net present value and efficiency

P/v ratio., The sale turnover and profit during two period were as followin...

The sale turnover and profit during two period were as following Period 1=Sales Rs.20 Laks, and Profit Rs.2 Laks Period 2=Sales Rs.30 Laks, and Profit Rs.4.Laks Calculate P/V Ratio

Explain the following types of costs, Explain the following types of costs....

Explain the following types of costs. a. Fixed and variable costs b. Explicit and implicit costs c. Direct and indirect costs d. Past and future costs e.

Calculate the price of regular bonds, XYZ Inc. plans to raise $5,000,000 ex...

XYZ Inc. plans to raise $5,000,000 external financing through issuing bonds, and is considering two options: regular bonds and zero couple bonds.  The regular bonds will have coupo

#title.payroll procedures., describe the procedures involved in payroll lab...

describe the procedures involved in payroll labour cost accounting

Choice of budget flexing basis, Choice of Budget Flexing Basis The mo...

Choice of Budget Flexing Basis The most suitable flexing basis must be considered where it assists in the comparison of alternative budget data at the planning stage and for

Applications of funds, Requirement for additional Funds A business would...

Requirement for additional Funds A business would require additional capital for two purposes: 1. Financing additional fixed assets, and

Decision analysis , can you guys do a project which is due in 2 weeks

can you guys do a project which is due in 2 weeks

Machining costing, what are the factor for setting costing for a certain ma...

what are the factor for setting costing for a certain machining job

Variable overhead expenditure variance, Variable Overhead Expenditure Varia...

Variable Overhead Expenditure Variance Budget for December 2003; Shs. Fixed Overheads 11,480 Variable Ov

Determine cash flow statement, Download the financials of Shoprite , study ...

Download the financials of Shoprite , study them, then, using ratio analysis, the cash flow statement, and the segmental breakdown of the results, prepare a statement outlining the

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd