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A public project has the following costs and benefits (in real dollars): Assume that 6% is the appropriate discount rate and that all costs and benefits displace only consumption.
a) What is the net present value (NPV) of the project? Does the project satisfy the Kaldor-Hicks criterion?
b) Suppose that all benefits are received by a "privileged" group in society (e.g., those with annual incomes above $100,000) and all costs are paid by an "underprivileged" group. What is the relative internal weight on the underprivileged group? Should the policy be enacted if the "true" social weight is greater or less than the internal weight? Explain.
c) Suppose instead that 50% of the initial (Year 0) costs displace private investment and the shadow price of capital (SPC) is 1.25. Ignoring distributional issues and using the SPC method, what is the NPV of the project?
Finding the value of inventory destroyed in natural disaster - estimate the amount of inventory destroyed in the natural disaster.
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what is your estimate of the value of the new project and what is the IRR of the new project? Should the firm invest in this project or not?
Under the Articles of Association of the Company, the preference shareholders have the right to receive one-third of the surplus remaining after repaying the equity share capital.
How long will it be before this money is exhausted? If Ashley epects to live another 17 years, with a standard deviation of 7 years, what is the probability that the money will be used up during her life?
Calculate NPV, IRR, MIRR, payback, and discounted payback for each project and why is there a conflict between NPV andIRR?
The old board retails for $21,400. Variable costs are 55 percent of sales, depreciation on the equipment to produce the new board will be $1,350,000 per year, and fixed costs are $1,250,000 per year - If the tax rate is 38 percent, what is the annu..
Abernathy Company was organized on Jan 1, 2012. It is authorized to issue 10,000 shares of 8 percent, $50 par value preferred stock, & 500,000 shares of no-par common stock with a stated value of $2/share.
Explain how each of the above theories explain changes in the economy and provide examples for each, and be sure to use and properly cite scholarly sources.
What unique challenges would a health care organization face when attempting to compute a true ROI?
Discuss what other objectives may be important to a public limited company and whether such objectives are consistent with the primary objective of shareholder wealth maximization.
A salvage value of $200,000 is expected at the end of year five and this salvage value is already included in the year five cash flows.
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