Questions from Cost Accounting

Q: A town’s recreation department is trying to decide how to use a

A town’s recreation department is trying to decide how to use a piece of land. One option is to put up basketball courts with an expected life of 8 years. Another is to install a swimming pool with an...

Q: CBAs have been conducted of six proposed projects. None of these

CBAs have been conducted of six proposed projects. None of these projects are mutually exclusive and the agency has a sufficient budget to fund those that will make society better off. The findings fr...

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: A country imports 3 billion barrels of crude oil per year and

A country imports 3 billion barrels of crude oil per year and domestically produces another 3 billion barrels of crude oil per year. The world price of crude oil is $90 per barrel. Assuming linear cur...

Q: The following table gives cost and benefit estimates in real dollars for

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 and Savings to Value of Pleasure  Year Patr...

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 usi...

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: 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...