Question: A project yields an annual benefit of 25 a
A project yields an annual benefit of $ 25 a year, starting next year and continuing forever. What is the present value of the benefits if the interest rate is 10 percent? Generalize your answer to show that if the perpetual annual benefit is B and the interest rate is r , then the present value is B/ r .
Relevant QuestionsSuppose that you are planning to take a year vacation to bike across the United States. Someone is willing to sell you a new bicycle for $ 500. At the end of the year, you expect to resell the bicycle for $ 350. The benefit ...According to Viscusi and Gayer , regulations in the United States vary greatly in the cost per each life they save. For example, the regulation to install passive restraints in vehicles has a cost per life saved of $ ...To work this problem, you’ll need a calculator that can take logarithms or a spreadsheet program. Suppose that your utility function is U = ln( 4 I ), where I is the amount of income you make in a given year. Suppose that ...The three panels in Figure 10.5 show instances in which health insurance either increases or stays the same with the introduction of government-provided insurance. Diagram a set of indifference curves that illustrates a ...Figure 11.5 assumed that the implicit rate of return from Social Security was the same as the private rate of return available to Liang from private savings. Assume now that Social Security has a lower implicit rate of ...
Post your question