6. To implement a congestion tax in a central business district, a government requires $150,000,000 upfront...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
6. To implement a congestion tax in a central business district, a government requires $150,000,000 upfront capital expenses for installation of gantry and surveillance equipment. The tax is intended to yield a profit of $40,000,000 per annum after maintenance expenses. At a later time, once the tax has paid for the initial costs, the government intends to spend $60,000,000 per year over four years upgrading the public transit network. At the end of the four-year period the government expects the congestion tax to return a profit of only $30,000,000 per year (additional revenue from the upgraded public transport is here omitted from the evaluation of the tax). How many years is it before the tax generates a break-even amount to offset the cost of the initial capital cost and the transit upgrade? Use a range of planning discount rates (3%, 6% and 10%) to compare the timeframes. 6. To implement a congestion tax in a central business district, a government requires $150,000,000 upfront capital expenses for installation of gantry and surveillance equipment. The tax is intended to yield a profit of $40,000,000 per annum after maintenance expenses. At a later time, once the tax has paid for the initial costs, the government intends to spend $60,000,000 per year over four years upgrading the public transit network. At the end of the four-year period the government expects the congestion tax to return a profit of only $30,000,000 per year (additional revenue from the upgraded public transport is here omitted from the evaluation of the tax). How many years is it before the tax generates a break-even amount to offset the cost of the initial capital cost and the transit upgrade? Use a range of planning discount rates (3%, 6% and 10%) to compare the timeframes.
Expert Answer:
Answer rating: 100% (QA)
The breakeven point can be calculated using the net present value NPV formula The NPV formula is use... View the full answer
Related Book For
Principles of heat transfer
ISBN: 978-0495667704
7th Edition
Authors: Frank Kreith, Raj M. Manglik, Mark S. Bohn
Posted Date:
Students also viewed these accounting questions
-
A school district receives a grant from the federal government to support programs directed at special needs students. The grant is a matching grant in which each dollar spent by the school district...
-
A new business venture requires $600,000 of equity capital from passive investors in addition to the $400,000 of capital that is being provided by the initiator of the project. The $600,000 will be...
-
In 2018, Rainbow Company offered 1,500,000 shares of OMR 1 each to the public for subscription and called up amount was 0.600 OMR. The company received the entire amount except on 1,500 shares on...
-
For students in the United States, compare Medicaid coverage in your state with coverage afforded to recipients in a neighboring state. Are they the same? If not, why do you think that they differ?
-
P(group O or group A) Group AB 2Rh Group B 8Rh 1Rh- 36Rh+ 6Rh 39Rh Group A 7Rh Group O
-
Provide a critical anaylysis of the different market structures, such as perfect competition, mnopolistic competition, oligopo and monopoly and how they differ in terms of the number of firms,...
-
With reference to the preceding exercise, check whether (a) the three random variables are independent; (b) any two of the three random variables are pairwise independent. Data From preceding...
-
Marys Ice Cream Shoppe sold 9,100 servings of ice cream during June for $4 per serving. Mary purchases the ice cream in large tubs from the Organic Ice Cream Company. Each tub costs Mary $14 and has...
-
How do you evaluate amazons approach to attracting, developing, and retaining talent?
-
A manufacturer of prefabricated homes has decided to subcontract four components of the homes. Several companies are interested in receiving this business, but none can handle more than one...
-
Stark Industries expects an earnings per share of $2.98 and reinvests 45% of its earnings. Management projects a rate of return of 4% on new projects and investors expect a 8% rate of return on the...
-
Give three examples of bilateral contracts from your everyday life that are not mentioned in the text.
-
Find out what contracts are considered formal contracts in your jurisdiction.
-
What is the difference between adapting to an environment and co-creating it?
-
Write an offer to sell a piece of your own personal property.
-
Under what circumstances would a person argue the doctrine of promissory estoppel?
-
Social Security numbers assigned in Michigan begin with the number 3 The second number must be 6, 7, or 8 The other 7 digits can be any digit Find the number of possible Michigan Social Security...
-
In the operation of an automated production line with storage buffers, what does it mean if a buffer is nearly always empty or nearly always full?
-
A high-speed computer is located in a temperature controlled room of 26?C. When the machine is operating its internal heat generation rate is estimated to be 800 W. The external surface temperature...
-
Show that the dimensionless equation for ice formation at the outside of a tube of radius ro is where Assume that the water is initially at the freezing temperature Tf, that the cooling medium inside...
-
Liquid sodium is to be heated from 500 K to 600 K by passing it at a flow rate of 5.0 kg/s through a 5 cm ID tube whose surface is maintained at 620 K. What length of tube is required?GIVENLiquid...
-
A food processor claims that at most \(10 \%\) of her jars of instant coffee contain less coffee than claimed on the label. To test this claim, 16 jars of her instant coffee are randomly selected and...
-
Refer to Exercise 4.2. (a) Determine the cumulative probability distribution \(F(x)\). (b) Graph the probability distribution of \(f(x)\) as a bar chart and below it graph \(F(x)\). Data From...
-
Four emergency radios are available for rescue workers but one does not work properly. Two randomly selected radios are taken on a rescue mission. Let \(X\) be the number that work properly between...
Study smarter with the SolutionInn App