A tax exempt municipality is considering the construction of a new municipal waste water treatment facility. Two different sites have been selected as technically, politically, socially, and financially feasible. The city council uses 6% interest rate for all analyses for public projects. The expected cash flow for the two alternatives are as follow: Year Alt. A Alt. B 0 - $15,072,472 - $25,872,924 1 - 75 $2,187,697/year $3,090,903/year What is the incremental benefit/cost ratio?
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A tax exempt municipality is considering the construction of a new municipal waste water treatment facility. Two different sites have been selected as technically, politically, socially, and financially feasible. The city council uses 6% interest rate for all analyses for public projects. The expected cash flow for the two alternatives are as follow:
Year | Alt. A | Alt. B |
0 | - $15,072,472 | - $25,872,924 |
1 - 75 | $2,187,697/year | $3,090,903/year |
What is the incremental benefit/cost ratio?
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- A tax exempt municipality is considering the construction of a new municipal waste water treatment facility. Two different sites have been selected as technically, politically, socially, and financially feasible. The city council uses 6% interest rate for all analyses for public projects. The expected cash flow for the two alternatives are as follow: Year Alt. A Alt. B - $14082160 - $26368476 $1826323/year $3081175/year 0 1- 75 What is the incremental benefit/cost ratio? Enter your answer as follow: 12.34Star City is considering an investment in the community center that is expected to return the following cash flows: Use Exhibit A.8. Year Net Cash Flow 1234in 5 $ 28,000 58,000 88,000 88,000 108,000 This schedule includes all cash inflows from the project, which will also require an immediate $208,000 cash outlay. The city is tax-exempt; therefore, taxes need not be considered. Required: a. What is the net present value of the project if the appropriate discount rate is 22 percent? (Round PV factor to 3 decimal places. Negative amount should be indicated by a minus sign.) Net present valueA local government has funded a public project with the following data. Initial investments $5,000,000 Annual benefits $1,500,000 Annual operating and maintenance (O&M) costs $300,000 Salvage value $500,000 Project life 8 years Interest rate (i) 6% A) Determine whether the project is a good investment by using conventional B-C (Benefit-Cost) ratio based on AW (Annual Worth) method. B)Determine whether the project is a good investment by using modified B-C (Benefit Cost) ratio based on PW (Present Worth) method.
- A city is building a new park. To finance the construction of the park, the city will issue a $1,800,000 bond, and receive a transfer of $200,000 from the general Please record the journal entries for the Capital Project Fund and the Government-Wide financial statements. 1. The city signed a contract with a construction company to construct the park for $2,000.000. 2. The $1.800.000 bonds were issued at par. 3. The construction company billed the city for $2,000,000 upon completion of the project. 4. The park is completed.The City of Vancouver has appointed you as an Assistant Project Manager to oversee the aspect of some upcoming projects. The Project Manager is requesting you to conduct a discounted cash flow calculation to determine the NPV of one of the projects which is part of the municipality’s cultural tourism initiatives. The project is expected to generate a net cash flow of $100,000.00, $200,000.00, $300,000.00, $350,000.00 and $450,000,00 in the next five years. The project will cost $1,500,000.00 to implement and the required rate of return is 25 percent. Calculate the Net Present Value of the project to enable the Project Management to communicate the viability or otherwise to the Municipality’s Project Council.A state constructs an office building. The construction is financed with: (1) a transfer of $1 million from the General Fund; (2) a grant of $3 million from the federal government; (3) bond proceeds of $6 million; and (4) earnings of $100,000 from temporary investment of bond proceeds. All transactions occur in one year. How much should be reported as Revenues in the Capital Projects Fund? $100,000 $1,100,000 $3,100,000 $10,100,000
- Financing for the renovation of Fir City's municipal park, begun and completed during Year 1, came from the following sources: Grant from state government $400,000 Proceeds from general obligation bond issue 500,000 Transfer from Fir's general fund 100,000 In its Year 1 capital projects fund operating statement, Fir should report these amounts as:) Revenues Other Financing Sources A) Operating cash flow only. B) Investing cash flow only C) Operating or investing cash flow. D) Operating or financing cash flow.A county will invest $5,600,000 to clean up a chemical spill that occurred following a natural disaster. At the end of the 9-year planning horizon, an additional $1,100,000 will be spent in restoring the site to an environmentally acceptable condition. The investment is expected to produce net annual benefits that will decrease by 24% each year. The net annual public benefit in the 1st year is estimated to be $2,600,000. Determine the B/C ratio for the investment using a 7% MARR. Click here to access the TVM Factor Table calculator. B/C=Net Present Value and Competing Projects Follow the format shown in Exhibit 12B.1 and Exhibit 12B.2 as you complete the requirements below. Spiro Hospital is investigating the possibility of investing in new dialysis equipment. Two local manufacturers of this equipment are being considered as sources of the equipment. After-tax cash inflows for the two competing projects are as follows: Year Puro Equipment Briggs Equipment 1 $320,000 $120,000 2 280,000 120,000 3 240,000 320,000 4 160,000 400,000 5 120,000 440,000 Both projects require an initial investment of $560,000. In both cases, assume that the equipment has a life of 5 years with no salvage value. Required: Round present value calculations and your final answers to the nearest dollar. 1. Assuming a discount rate of 12%, compute the net present value of each piece of equipment. Puro equipment: $fill in the blank 1 Briggs equipment: $fill in the blank 2 2. A third option has…
- A local municipality is considering investing $210,000 to upgrade a park. Based on similar investments made by similar cities, it is anticipated the investment will result in annual costs and annual benefits over a 15-year period as shown in the cash flow profile given below in thousands of dollars. Notice, an intermediate investment of $130,000 is anticipated in the 6th year of the investment. Based on a MARR of 3%, use benefit-cost ratio analysis to determine whether the investment should be made. (All values in thousand dollars) End-of Year Net Cash Costs Benefits Flow 0 $210 -$210 1 $70 $115 $45 2 $70 $125 $55 3 $70 $135 $65 4 $70 $145 $75 5 $70 $155 $85 67 $200 $165 -$35 $70 $155 $85 8 $70 $145 $75 6 $70 $135 $65 10 $70 $125 $55 11 $70 $115 $45 12 $70 05 $35 W 13 $70 $95 $25 14 $70 $85 $15 15 $70 $75 $5 Click here to access the TVM Factor Table calculator. B/C- final answer to 4 decimal places. The tolerance is 10.0003.A county will invest $4,800,000 to clean up a chemical spill that occurred following a natural disaster. At the end of the 9-year planning horizon, an additional $1,200,000 will be spent in restoring the site to an environmentally acceptable condition. The investment is expected to produce net annual benefits that will decrease by 25% each year. The net annual public benefit in the 1st year is estimated to be $3,000,000. Determine the B/C ratio for the investment using a 6% MARR. Click here to access the TVM Factor Table calculator. B/C = Carry all interim calculations to 5 decimal places and then round your final answer to 3 decimal places. The tolerance is ±0.003.Armaan Incorporation, has two investment proposals, which have the following characteristics:PROJECT A PROJECT BPERIODCOSTPROFIT AFTER TAXNET CASH FLOWCOSTPROFIT AFTER TAXNET CASH FLOW 0$9,000--$12,000-- 1 $1,000$5,000 $1,000$5,000 2 $1,000$4,000 $1,000$5,000 3 $1,000$3,000 $4,000$8,000 For each project, compute its payback period, its net present value, and its profitability index using a discount rate of 15 percent.