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

Compute the annual depreciation on the new equipment, Goldman Corporation b...

Goldman Corporation bought a machine on June 1, 2010, for $44,838, f.o.b. the place of manufacture. Freight to the point where it was set up was $282, and $705 was expended to inst

Concepts of balanced scorecard and performance measurement, A college curre...

A college currently measures its performance by comparing the actual costs against its budgeted costs for the year.Now that the college is facing increased competition from Various

Cretae trial balance in t-accounts, Chrome-It, Inc., manufactures special c...

Chrome-It, Inc., manufactures special chromed parts made to the order and specifications of the customer.  It has two production departments, stamping and plating, and two service

Evaluate amount of goodwill should horace wimp record, Blue sky Company's 1...

Blue sky Company's 12-31-13 balance sheet reports assets of $5,000,000 and liabilities of $2,000,000. All of the book value's are the same as the market values except for land, wh

Cost element, Cost Element Stage 1. Cost Elements The raw data co...

Cost Element Stage 1. Cost Elements The raw data concern with Labour, Expenses, and Materials are gathered from Invoices, Payroll, and Requisitions and Goods Issued Notes

Cash budget - budgetary planning and control, Cash Budget - Budgetary Plann...

Cash Budget - Budgetary Planning and Control This can records the cash outflows and inflows that are expected to take place in respect of every functional budget. This may be

Market value schedule, A Market Value Schedule (in one report),for the comp...

A Market Value Schedule (in one report),for the complex. This schedule should show the market value of the complex at the end of each year of the project.  Valuation method and oth

Budgetary planning and control, Budgetary Planning and Control Budgeti...

Budgetary Planning and Control Budgeting refers to the process of quantifying the plans of an organization such as to enable it get its objectives in the defined duration.  Th

Stores layout and location - material handling, Stores layout and location ...

Stores layout and location - Material Handling The layout of stores must ensure as a) For movement of material, ease of access out and in of stores b) The issue of peris

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