The city of Ottawa is planning a new expansion for its bike routes, the project cost...
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The city of Ottawa is planning a new expansion for its bike routes, the project cost is estimated to be $27,000,000 and is to be paid in 6 equal payments of $4,500,000 cach (Payment 1 is due before commencement (now), Payments 2-6 at the end of years 1, 2, 3, 4, and when the construction is done by the end of year 5). The feasibility assessment period of this project is 20 years after construction. This proposal benefits the city a total of $2,600,000 by reducing congestion and air pollution. The O&M costs for the proposed routes is expected to be $500,000 per year. If the social discount rate for this project is chosen to be 5%. A] Draw a cash flow diagram. B] Calculate the benefit/cost ratio of this project and comment on its feasibility. C) if the feasibility assessment period is changed to 50 years after construction, how would that impact the project's feasibility. The city of Ottawa is planning a new expansion for its bike routes, the project cost is estimated to be $27,000,000 and is to be paid in 6 equal payments of $4,500,000 cach (Payment 1 is due before commencement (now), Payments 2-6 at the end of years 1, 2, 3, 4, and when the construction is done by the end of year 5). The feasibility assessment period of this project is 20 years after construction. This proposal benefits the city a total of $2,600,000 by reducing congestion and air pollution. The O&M costs for the proposed routes is expected to be $500,000 per year. If the social discount rate for this project is chosen to be 5%. A] Draw a cash flow diagram. B] Calculate the benefit/cost ratio of this project and comment on its feasibility. C) if the feasibility assessment period is changed to 50 years after construction, how would that impact the project's feasibility.
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Answer rating: 100% (QA)
AJ The cash flow diagram for the project is as follows Year 0 27000000 Year 1 4500000 Year 2 4500000 ... View the full answer
Related Book For
Income Tax Fundamentals 2017
ISBN: 9781305872738
35th edition
Authors: Gerald E. Whittenburg, Steven Gill, Martha Altus-Buller
Posted Date:
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