Question
1.(30) In the past, the Afram Foundation has awarded many grants to improve the living and medical conditions of people in war-torn and poverty-stricken countries
1.(30) In the past, the Afram Foundation has awarded many grants to improve the living and medical conditions of people in war-torn and poverty-stricken countries throughout the world. In a proposal for the foundation's board of directors to construct a new hospital and medical clinic complex in a deprived central African country, the project manager has developed some estimates. These are developed, so she states, in a manner that does not have a major negative effect on prime agricultural land or living areas for citizens. The foundation's discount rate is 5.5% per year.
-Investment(Award) amount: $18 million (end of) first year, decreasing by $3 million per year for 3 additional years, and no more investments afterwards.
-Annual costs: $2.5 million per year for 10 years, as proposed
-Benefits: Reduction of $9.0 million per year in health-related expenses for citizens
-Disbenefits: $0.6 million per year for removal of arable land and commercial districts
(a)(15) Use the conventional and modified B/C methods to determine if this grant proposal is economically justified over a 10-year study period.
(b)(15) How much annual costs should be reduced at least to justify this grant in the modified method?
1.(30) The Ministry of Land, Infrastructure, and Transport is considering five national park projects shown below, all of which can be considered to last indefinitely.
(a)(10) Calculate Rates of return (%) of the five projects.
At a MARR of 5.5% per year, determine which should be selected, if they are
(b)(10) Independent
(c)(10) Mutually exclusive.
. No points will be given unless solution procedures are provided.
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