In 2022, the California Air Resources Board (CARB) started planning its "Phase 3" requirements for reformulated gasoline (RFG). RFG is gasoline blended to tight specifications designed to reduce pollution from motor vehicles. CARB consulted with refiners, environmentalists, and other interested parties to design these specifications. As the outline for the Phase 3 requirements emerged, refiners realized that substantial. capital investments would be required to upgrade California refineries. Assume a refiner is contemplating an investment of $320 million to upgrade its California plant. The investment lasts for 14 years and does not change raw material and operating costs. The real (inflation-adjusted) cost of capital is 6%. How much extra revenue would be needed each year to recover that cost? Note: Enter your answer in dollars, not millions, rounded to the nearest whole number. Annuity payment

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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In 2022, the California Air Resources Board (CARB) started planning its "Phase 3"
requirements for reformulated gasoline (RFG). RFG is gasoline blended to tight
specifications designed to reduce pollution from motor vehicles. CARB consulted with
refiners, environmentalists, and other interested parties to design these specifications.
As the outline for the Phase 3 requirements emerged, refiners realized that substantial
capital investments would be required to upgrade California refineries.
Assume a refiner is contemplating an investment of $320 million to upgrade its
California plant. The investment lasts for 14 years and does not change raw material
and operating costs. The real (inflation-adjusted) cost of capital is 6%.
How much extra revenue would be needed each year to recover that cost?
Note: Enter your answer in dollars, not millions, rounded to the nearest whole
number.
Annuity payment
Transcribed Image Text:es In 2022, the California Air Resources Board (CARB) started planning its "Phase 3" requirements for reformulated gasoline (RFG). RFG is gasoline blended to tight specifications designed to reduce pollution from motor vehicles. CARB consulted with refiners, environmentalists, and other interested parties to design these specifications. As the outline for the Phase 3 requirements emerged, refiners realized that substantial capital investments would be required to upgrade California refineries. Assume a refiner is contemplating an investment of $320 million to upgrade its California plant. The investment lasts for 14 years and does not change raw material and operating costs. The real (inflation-adjusted) cost of capital is 6%. How much extra revenue would be needed each year to recover that cost? Note: Enter your answer in dollars, not millions, rounded to the nearest whole number. Annuity payment
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