The federal government is planning to clean up the Great Pacific Garbage patch. It will cost $2bn in the first year and then $1bn in the following year. The benefits of the clean-up will be greater marine life, valued at $2bn for 3 years after the clean-up. If the discount rate is 40%, should the federal government do this? Yes, because $6bn is bigger than $2bn Yes, because the present value of benefits exceeds the present value of costs No, because the present value of benefits is lower than the present value of costs Yes, because clean-up of marine life is always important

The federal government is planning to clean up the Great Pacific Garbage patch. It will cost $2bn in the first year and then $1bn in the following year. The benefits of the clean-up will be greater marine life, valued at $2bn for 3 years after the clean-up. If the discount rate is 40%, should the federal government do this? Yes, because $6bn is bigger than $2bn Yes, because the present value of benefits exceeds the present value of costs No, because the present value of benefits is lower than the present value of costs Yes, because clean-up of marine life is always important

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter17: Long-term Investment Analysis

Section: Chapter Questions

Problem 10E

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