The federal government is considering closing down a substantial portion of the John Day Fossil Beds in Oregon and selling the land to private interests. In considering this policy, economists advise the government to choose the option that has the highest net present value. They consider costs and benefits into the infinite future.Closing the fossil beds provides an immediate $3 million from the sale of the land andan annual savings of $100,000 in reduced maintenance costs. However, recreational users and conservationists no longer derive any benefit from the land, losing $500,000in benefits annually. a) If the discount rate is r = 2.5%, are the benefits of closing the monument larger than the costs?

The federal government is considering closing down a substantial portion of the John Day Fossil Beds in Oregon and selling the land to private interests. In considering this policy, economists advise the government to choose the option that has the highest net present value. They consider costs and benefits into the infinite future.Closing the fossil beds provides an immediate $3 million from the sale of the land andan annual savings of $100,000 in reduced maintenance costs. However, recreational users and conservationists no longer derive any benefit from the land, losing $500,000in benefits annually. a) If the discount rate is r = 2.5%, are the benefits of closing the monument larger than the costs?

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter1: Introduction And Goals Of The Firm

Section: Chapter Questions

Problem 4E: In the Southern Company Managerial Challenge, which alternative for complying with the Clean Air Act...

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