overnment is considering building more 9% discount rate and a 50 year time pe y do so, they will have to pay $280,000 gate demand per year for visiting the b sit per year, but when the new parking late the net present value of building th mber to maintain several significant di
overnment is considering building more 9% discount rate and a 50 year time pe y do so, they will have to pay $280,000 gate demand per year for visiting the b sit per year, but when the new parking late the net present value of building th mber to maintain several significant di
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
Section: Chapter Questions
Problem 1PS
Related questions
Question
!
Transcribed Image Text:The government is considering building more parking spaces at a popular beach so that more people can use the beach.
Use a 9% discount rate and a 50 year time period.
If they do so, they will have to pay $280,000 immediately (t = 0) to build the parking spaces, and then $11,000 per year for maintenance (t = 1, ..., 49).
Aggregate demand per year for visiting the beach is given by P = 53 - 0.008Q. Currently with the smaller number of parking spaces only 3200 people
can visit per year, but when the new parking spaces are complete 5100 people will be able to visit per year (t = 1, ..., 49).
Calculate the net present value of building the extra parking spaces.
Remember to maintain several significant digits for your calculation process.
For your final answer you can round up to two numbers after the decimal.
Answer:
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps with 1 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.Recommended textbooks for you
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Foundations Of Finance
Finance
ISBN:
9780134897264
Author:
KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:
Pearson,
Fundamentals of Financial Management (MindTap Cou…
Finance
ISBN:
9781337395250
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Finance
ISBN:
9780077861759
Author:
Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:
McGraw-Hill Education