This activity lets you practice calculating present values using a variety of time horizons and discount...
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This activity lets you practice calculating present values using a variety of time horizons and discount rates to notice patterns and apply the cost/benefit approach of decision making. You will also examine concentration predictions using under three Representative Concentration Pathways (RCPs). Part 1: "Costs of Relocating Climate Refugees by 2100" (Calculating Present Values) Discounting allows costs and benefits, in money terms, to be brought into today's value, the present value. A higher discount rate implies that money has higher value in the near-term than the long-term: that the future is discounted more intensely than the present. A 0% interest rate would imply infinite patience because $1 today would be the same as $1 in one million years. A 10% discount rate implies less patience than a 5% discount rate. From your reading this week you know residents of a small Alaskan village voted to relocate their entire community from a barrier island that has been steadily disappearing because of erosion and flooding attributed to climate change. Let's consider the present value of their move depending on the time scale of when it could occur. Costs of relocation = $300,000/per resident. Number of residents = 500 Current year = 2024 D= 21+11 Table 1: Present Value of Relocation in years 2030, 2050, 2100 Discount Rate 2030 2050 2100 Formula Value Formula Value Formula Value 2% 5% 10% This activity lets you practice calculating present values using a variety of time horizons and discount rates to notice patterns and apply the cost/benefit approach of decision making. You will also examine concentration predictions using under three Representative Concentration Pathways (RCPs). Part 1: "Costs of Relocating Climate Refugees by 2100" (Calculating Present Values) Discounting allows costs and benefits, in money terms, to be brought into today's value, the present value. A higher discount rate implies that money has higher value in the near-term than the long-term: that the future is discounted more intensely than the present. A 0% interest rate would imply infinite patience because $1 today would be the same as $1 in one million years. A 10% discount rate implies less patience than a 5% discount rate. From your reading this week you know residents of a small Alaskan village voted to relocate their entire community from a barrier island that has been steadily disappearing because of erosion and flooding attributed to climate change. Let's consider the present value of their move depending on the time scale of when it could occur. Costs of relocation = $300,000/per resident. Number of residents = 500 Current year = 2024 D= 21+11 Table 1: Present Value of Relocation in years 2030, 2050, 2100 Discount Rate 2030 2050 2100 Formula Value Formula Value Formula Value 2% 5% 10%
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Organizations Behavior, Structure, Processes
ISBN: 978-0078112669
14th Edition
Authors: Gibson, Ivancevich, Donnelly, Konopaske
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