Question: I need help populating this sheet and making sure my calculations are correct 1. Calculate the expected cost of a catastrophic emergency in the first
I need help populating this sheet and making sure my calculations are correct
1. Calculate the expected cost of a catastrophic emergency in the first year in cell H10 by multiplying the Emergency Cost by the initial probability (InitProb) of such an event. 2. Calculate the initial annual values for Shore and Surf visitors (cells M8 and M9) by multiplying the value per visitor times the number of visitors and then dividing the result by 1,000,000 to express the value in millions of dollars. 3. Use a fixed reference to the annual maintenance cost to fill in column E for years 0 to 30. Then use the finite (terminating) annual series formula in cell E15 to calculate the present value of the maintenance costs. Remember that the series formulas assume that the first payment always starts at the end of the period. But here we have a payment at time zero. So you need to add one payment to the finite annual series formula. Here's what my formula in cell E15 looks like: =E17*((1+D4)^B47-1)/(D4*(1+D4)^B47)+E17 4. Now, in column F calculate the expected cost of a catastrophic emergency for each year by multiplying (a fixed reference to) the expected cost of a catastrophic emergency in the first year (in cell H10) times one plus the annual increase in the probability of a catastrophic event (cell H11), raised to the power of the number of years (column A). Here's what my formula in cell F17 looks like: =$H$10*(1+$H$11)^B17. Note how I use fixed and variable references so I only have to enter a formula once and then I can copy it down for the whole column.) This formula has the effect of increasing the probability - and hence the expected cost - of a catastrophic emergency by 1% each year. 5. Now, (in column G) calculate the present value of the expected cost of a catastrophic emergency for each year using the single value formula. Here's what my formula in cell G17 looks like: =F17/(1+$D$4)^B17. Calculate the sum of this column in cell G15 to get the present value of the expected costs of a catastrophic emergency for the 30-year planning horizon. 6. Use a similar approach as you did for the emergency PV calculations to calculate the projected Shore Visitor Values and Surf Visitor Values and their present values in columns J through M. Remember, these values need to change at the projected growth rate for each type of visitor. 7. To calculate the NPV for this scenario (for an ARR of 7%), just add up the present values of the benefits and subtract the present values of the costs. 8. To calculate the B/C ratio for this scenario, divide the sum of the present values of the benefits and divide by the sum of the present values of the costs. 9. Repeat this process for the remaining scenarios. Note that we didn't have an initial investment in this scenario, but you will have to include the present value of the initial investments in the other scenarios.
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