Compute the cost per visit to jellystone for an inhabitant

Assignment Help Financial Management

Reference no: EM131190552

Jellystone National Park is located 10 minutes away from city A and 20 minutes away from city B. Cities A and B have 200,000 inhabitants each, and residents in both cities have the same income and preference for national parks. Assume that the cost for an individual to go to a national park is represented by the cost of the time that it takes her to get into the park.

Also assume that the cost of time for individuals in cities A and B is $0.50 per minute. You observe that each inhabitant of city A goes to Jellystone ten times a year, while each inhabitant of city B goes only five times a year. Assume the following: the only people who go to the park are the residents of cities A and B; the cost of running Jellystone is $1,500,000 a year; and the social discount rate is 10%. Also assume that the park will be there forever.

a. Compute the cost per visit to Jellystone for an inhabitant of each city.

b. Assuming that those two observations (cost per visit and number of visits per inhabitant of city A, and cost per visit and number of visits per inhabitant of city B) correspond to two points on the same linear individual demand curve for visits to Jellystone, derive that demand curve. What is the consumer surplus for inhabitants of each city? What is the total consumer surplus?

c. There is a timber developer who wants to buy Jellystone to run his business. He is offering $100 million for the park. Should the park be sold?

Reference no: EM131190552

Questions Cloud

Market value of the bonds using semiannual analysis : a. Find the market value of the bonds using semiannual analysis. b. Do you think the bonds will sell for the price you arrived at in part a? Why?

What does your willingness to pay for these vacations : Supposing that you're indifferent between these two destinations, save for the differential risk of death, what does your willingness to pay for these vacations tell you about how much you value your life?

Relationship between the current spot rate : What is the relationship between the current spot rate and the strike price? and what is the relationship between the domestic interest rate, the foreign interest rate, the time to maturity, and the volatility.

How you teach students to generalize the skill in other area : How will you teach them to generalize this skill in other areas such as in a restaurant, at home, or when visiting friends? How will you teach them to deal with hearing or seeing other people use poor manners?

Compute the cost per visit to jellystone for an inhabitant : There is a timber developer who wants to buy Jellystone to run his business. He is offering $100 million for the park. - Should the park be sold?

Describe the principles behind linear regression : Describe the principles behind linear regression. What assumptions are made when linear regression is used? How can linear regression be used for prediction? Give an example of how this method of analysis might be used in dental research

Payback period for project : Quattro, Inc. has the following projects available. The company has historically used a 4-year cutoff (payback period) for projects. The required return rate is 11%.

Find the maximum current through the 5 resistors : Find the maximum current through the 5-Ω resistors and determine the value of n .

Core market offerings and defining the product : From the case study, take a position on whether Tropicana did or did not make a major mistake in changing its product packaging. Next, suggest the next two (2) steps that you believe Tropicana should take in its branding strategy in order to count..

User Account

All Pages