Questions from Cost Accounting

Q: The environmental protection agency of a county would like to preserve a

The environmental protection agency of a county would like to preserve a piece of land as a wilderness area. The current owner has offered to lease the land to the county for 20 years in return for a...

Q: Imagine that the current owner of the land in the previous exercise

Imagine that the current owner of the land in the previous exercise was willing to sell the land for $2 million. Assuming this amount equaled the social opportunity cost of the land, calculate the net...

Q: What weaknesses do you see in this CBA? If corrected,

What weaknesses do you see in this CBA? If corrected, would they increase or decrease the expected NPV?

Q: (Instructor-provided spreadsheet recommended.) New City is considering building

(Instructor-provided spreadsheet recommended.) New City is considering building a recreation center. The estimated construction cost is $12 million with annual staffing and maintenance costs of $750,0...

Q: (Instructor-provided spreadsheet recommended.) The following table gives cost

(Instructor-provided spreadsheet recommended.) The following table gives cost and benefit estimates in real dollars for dredging a navigable channel from an inland port to the open sea. Dredging an...

Q: An analyst for a municipal public housing agency explained the choice of

An analyst for a municipal public housing agency explained the choice of a discount rate as follows: “Our agency funds its capital investments through nationally issued bonds. The effective interest r...

Q: Assume the following: Society faces a marginal excess tax burden of

Assume the following: Society faces a marginal excess tax burden of raising public revenue denoted METB; the shadow price of capital equals θ; public borrowing displaces private investment dollar for...

Q: Assume a project will result in benefits of $1.2

Assume a project will result in benefits of $1.2 trillion in 500 years by avoiding an environmental disaster that otherwise would occur at that time. a. Compute the present value of these benefits us...

Q: The initial cost of constructing a permanent dam (i.e

The initial cost of constructing a permanent dam (i.e., a dam that is expected to last forever) is $830 million. The annual net benefits will depend on the amount of rainfall: $36 million in a “dry” y...

Q: Use several alternative discount rate values to investigate the sensitivity of the

Use several alternative discount rate values to investigate the sensitivity of the present value of net benefits of the dam in exercise (1) to the assumed value of the real discount rate.