Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
The government of a small South Pacific island is considering whether to allow development of a small but valuable deposit of phosphate rock. Not having the resources to develop and mine the deposit themselves, the country has the option to sell a lease to a foreign mining company for an immediate one-time fee of $12 million - resources that can be used to address many development challenges in the country1. The lease will expire (and the deposit will likely be mined out) in 20 years. A panel of experts suggests that the mining of the phosphate, despite the use of best practices to avoid contamination, will eventually result in contamination of surface and groundwater supplies in a manner that will increase health risks for some residents. Best estimates of these health-related damages (willingness to pay to avoid the damage) are a total of $18 million. Moreover, the health effects are not likely to be experienced until the end of the 20 year lease.
a. Suppose that the government of the island choose a discount rate of .04. What is the present value of the damages created by the project? What is the net present value of the project from the vantage of the government? Assuming this is the best (i.e. most efficient) way to develop the phosphate resource, is doing so justifiable on the basis of economic efficiency?
b. Find the breakeven discount rate such that the net present value of this development opportunity is zero (i.e. find the internal rate of return).
c. The government of the country has decided to allow the project to go forward. However, as a measure to deal with perceived inequities across generations, they decide to invest a substantial portion of the lease payment. Assume that $9 million is invested at a 4% annual rate (compounded annually). Will the future value of this investment be sufficient to compensate those that suffer damages in year 20?
d. Read p. 96-100 of Goodstein. How does the "environmental bond" discussed in c) help to foster sustainability in the "neoclassical" sense discussed by economists like Robert Solow?
Under what conditions is a market-based transfer price optimal?
The following data relate to three joint products: A B C
what are the purposes of cost accounting information
Given the information that follows, prepare a cash budget for the XYZ Store for the first six months of 2010. All prices and costs remain constant. Sales are 90% for cre
Smart Ltd ha sa unit selling price of $500 variable costs per unit of $325 and fixed costs of $140 000. Calculate the break even point in units using (a) a mathematical equations a
What are investment appraisal methods when opening a new project?
A forecasted increase in metal prices has encouraged the ABC Resource Company to consider the expansion of the capacity in one of its mine operations in Northern Ontario. For this
Bubble Corporation manufactures two products, I and II, from a joint process. A single production costs $4,000 and results in 100 units of I and 400 units of II. To be ready for sa
Standard Cost It is especially serious that you establish a link between standard budgets and costs. At this point, you require putting in your mind to standard costs one the
Direct material yield variance (MYV) : It has been described by the ICMA, London, as 'the variation between the standard yield of the actual material input and the actual yi
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!
whatsapp: +1-415-670-9521
Phone: +1-415-670-9521
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd