Question 8.P.10: In Example 8.7, assume that the affected farmers are lobbyin......
In Example 8.7, assume that the affected farmers are lobbying for relocation payments and subsidies to compensate them for the lost farmland. Estimates of “equitable” payments vary widely, but one number being considered is an annual payment of $3.25 million per year to the farmers over the 30-year period. Would the project still be desirable, with this new disbenefit?
Step-by-Step
BCR = \frac{\$60.0 – \$3.25}{\$24.1} = 2.35
Since BCR > 1, the project is still desirable.
Related Answered Questions
Question: 8.P.5
Verified Answer:
From (8.2),
NPV = -|CF_0| + A(PIA, ...
Question: 8.P.12
Verified Answer:
By the net present value method:
NPV_A[/lat...
Question: 8.P.11
Verified Answer:
In this particular case, it makes very little diff...
Question: 8.P.6
Verified Answer:
Try i = 15%
NPV = -$50 000 + $16719(P/A, 15%, 5) =...
Question: 8.P.4
Verified Answer:
By definition, the ROR is the interest rate at whi...
Question: 8.P.1
Verified Answer:
By (8.1),
NPV\ =\ -|CF_0|\ +\ \sum\limits_{...
Question: 8.7
Verified Answer:
Over the entire 30-year period, the yearly net ben...
Question: 8.5
Verified Answer:
The sum of the first three yearly cash inflows, $3...
Question: 8.P.9
Verified Answer:
(a) PBP = \frac{\$50 000}{\$16719 \text{p...
Question: 8.P.8
Verified Answer:
Descartes' rule tells us to expect no more than th...