Question: You are a project analyst at PMD Ghana Ltd , a bus operator interested in biddingfor a public transport project of a city government in

You are a project analyst at PMD Ghana Ltd, a bus operator interested in biddingfor a public transport project of a city government in a South Asian country. Theproject requires PMD Ghana Ltd to operate buses in the public-privatepartnership system on designated routes. The company has to invest 50 busesin the project, each costing $50,000, and operate it for five years. The total initialinvestment outlay is expected to be $3 million. The project has no salvage value.The city government has guaranteed to apply each bus for at least 50,000kilometres at $1.75 per kilometre. The companys variable costs are $1 perkilometre, and its fixed costs are $250,000 annually. The risk-free rate is 5%,and the companys risk analyst has worked out the project beta to be 1.8. Returnon the broad market is 10%. The weighted average cost of capital of the companyis 8%. The country has offered a total tax exemption. You are to assess the projecteconomic viability and its sustainability in terms impact to the companyoperations

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