Suppose that the City of Nairobi is planning a bid to host the 2032 Olympics and has estimated the following benefits: The estimated benefits at the end of year 1 (B₁) are $300 million, at the end of year 2 (B₂) are $200 million, and at the end of year 3 (B3) only $100 million (after the third year there are no further benefits). If the estimated interest rate is 4% (r = 0.04) then using the estimated value of benefits equation below, calculate the maximum value (and therefore, the maximum amount that Nairobi should bid) for the 2032 Olympics. V = B1 B₂ (1+r) (1+r)² + $555,421,869 $574,812,436 $562,272,417 $534,998,971 + B3 (1+r)³

Suppose that the City of Nairobi is planning a bid to host the 2032 Olympics and has estimated the following benefits: The estimated benefits at the end of year 1 (B₁) are $300 million, at the end of year 2 (B₂) are $200 million, and at the end of year 3 (B3) only $100 million (after the third year there are no further benefits). If the estimated interest rate is 4% (r = 0.04) then using the estimated value of benefits equation below, calculate the maximum value (and therefore, the maximum amount that Nairobi should bid) for the 2032 Olympics. V = B1 B₂ (1+r) (1+r)² + $555,421,869 $574,812,436 $562,272,417 $534,998,971 + B3 (1+r)³

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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