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A project will last for two years, year 0 and 1. The project would be built in year 0 and start operating at the beginning
A project will last for two years, year 0 and 1. The project would be built in year 0 and start operating at the beginning of year 1 and terminate at the end of year 1. During year 0, GHS 3000 is spent in the purchase of machinery. To finance the project, the owner will require a loan from a private bank equivalent to 50% of the initial investment cost. The repayment on the interest and the principal of the loan is due in Year 1. The loan carries a 20% interest rate. The project generates GHS 1200 in sale in year 1 and receives a subsidy equivalent to 50% of sales value. Operating costs are GHS 420 in year 1 and taxes amount to 300. The project sells its equipment at the end of year 1 for GHS 2850. The project creates pollution. The cost of cleaning up the area contaminated by the project has been estimated at GHS 570 per year of operation. The government will not require the investor to clean up after the completion of the project. The land required, which is currently owned by the developer of the project, has an opportunity cost, as it could have been rented to other business for GHS 90 per year. Identify the various stakeholders in the project and determine the economic and financial benefits and cost to these stakeholders.
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