Community expressing interest in locating plant in area

Assignment Help Financial Management

Reference no: EM131904264

A manufacturer has approached a community expressing interest in locating a plant in the area. The economic development staff of the community has proposed either of two plant sites for the facility. One location is a Greenfield and the other a Brownfield. The sites are about the same size and are both generally adequate for the plant location. In comparing the two sites and assessing the potential costs of locating on them, the following information has been developed.

Greenfield Brownfield

Initial Costs (dollars)

Plant construction 100,000,000 100,000,000

Site preparation 15,000,000 20,000,000

Site remediation 0 20,000,000

Utilities 5,000,000 3,000,000

Access roads 10,000,000 5,000,000

Workforce development 15,000,000 10,000,000

Brownfield/Greenfield economic incentives

(dollars per year)

Tax rate 1,500,000 750,000

Industrial loan payments 5,000,000 2,500,000

With the incentives, the community is trying to encourage use of the Brownfield. To do so it has reduced the Brownfield tax rate and it would make available low interest loans for the facility. To obtain the current total value of the taxes and loans use a present worth factor of 7.360 [10 years at 6% interest] for both sites.

Reference no: EM131904264

Questions Cloud

Explain actual financing behavior : ‘Our theories do not seem to explain actual financing behavior’. In what ways do the main Modigliani & Miller economic models of gearing fail?

Create portfolio with zero standard deviation : How to mix these two assets to create a portfolio with zero standard deviation?

What is the expected return of your portfolio : What is the expected return of your portfolio?

Why the dividend policy can be considered irrelevant : Explain why the dividend policy can be considered irrelevant to company value from the point of view of both an investor and a company,

Community expressing interest in locating plant in area : A manufacturer has approached a community expressing interest in locating a plant in the area.

Market portfolio has expected return-standard deviation : Suppose the? risk-free return is 3.1 % and the market portfolio has an expected return of 9.4 % and a standard deviation of 16 %.

Motives for mergers lead to benefits for society : Some of the motives for mergers lead to benefits for society,

Create portfolio with zero standard deviation : How to mix these two assets to create a portfolio with zero standard deviation?

Should he cash the cd or use the? in-store financing : Antonio would like to replace his golf clubs with a custom measured set. Should he cash the CD or use the? in-store financing?? Why?

User Account

All Pages