As the weekly Monday cabinet meeting was about to begin, US President Joe Piden, opened the cabinet meeting with "Alright guys, we need a voter distraction from my disastrous poll numbers, out of control Inflation, the southern border mess, rising gas prices and the Afghanistan withdrawal debacle I haven't messed up the Russia/Ukraine conflict yet, but think it is safe to assume I will screw it up somehow. Vice President, Pamala Zarris, elegled in her irritating way, "Maybe killing the Keystone Pipeline was not such a great idea, eh Mr. Presidenti?". "Funny Pamalal Have you checked your approval ratings lately??....ICIS is polling highert You should be as concerned as I am; your future presidency is slipping from your gripl... so much for being the first female President of the United States?!" Pete Puttigieg ("Mayor Pete"), the Secretary of Transportation, chimed in, "You are so right Mr. President, we also need a distraction from the supply chain problems which I am point man on. Thank God, my adoption came through just in time so I could go on parental leave and dodge that bullet! The only thing being managed worse than the supply chain is the southern border, right Pamala?! "Alright, let's cut the chatter. You two can have a cage match later to decide who will replace me in 2024. It's obvious to the voters that none of us know what the hell we are doing. A distraction is what is needed here, and I guess if it fiscally makes sense, that is a bonus!" "Last week I visited Detroit and drove GM's Silverado and Ford's F150 EV pick-up trucks. I like big trucks! Driving them reminds me of my 1970 muscle car and makes me pine for better days when I did not have this crappy job. I wish I could just jump in one of those pickup trucks and drive away from this job, but it seems like I am stuck here for a few more years. So, here is what I am thinking. We build 100,000 charging stations and locate them in every voter swing state. The super wokes will love it. Maybe even AOC will give us a thumbs up...but probably not; she never seems to like anything I do. Let's hope she chokes on her dumb $1-$2 trillion student debt forgiveness plan! Pamala interjected "Mr. President, building all these charging stations will cost a few hundred million dollars and we are kind of spending a lot these days...remember the $2 trillion "Build Back Better Program? The public didn't really buy that it will cost nothing. Maybe we should look at a real zero investment options" "Good point. What were you thinking, Pamala?" "Let's encourage the private sector to build the charging stations. We can provide low interest loans to charging companies, accelerated write downs of equipment, or tax breaks. I mean they still cost the government, but most voters don't realize that and think they are costless-Easy to sell!" I was focusing on my marque achievement: a new stop sign in downtown South Bend at Main That is not a bad idea, Pamela (Your first since being elected Pete you were a superstar ut McKinsey Consulting, can you spin the numbers for us "Sure. I can do some NPV analysis of the options. I was actually working on a charine program while I was mayor of South Bend, so I have the data. I never quite finished the analysis because and Am. This analysis seems a bit more of a challenge, but I am up to it. I just hope another adoption doesn't sideline me just when you need me most." "NPV...Come on manII... slow down with the consulting speak"...make it so the man on the street can understand it as well the highbrow Wall Street crowd. Do some payback and ROI analysis as well so we can sell it to "main street." "Pete, get the analysis to me by tomorrow. If we can sell the voters on this, we can make the Afghanistan departure debacle a distant memory!" "Meeting adjourned! I don't want to miss my Beverly Hillbillies rerun...Elly May is getting married today!" 1. Calculate the NPV/payback and annualized Ror of an average EV charging station under the current conditions. What is the PV of the income taxes/payments collected/paid by the government for the 100,000 planned charging stations? The Government's cost of capital is 2%...governments don't pay taxes. Assume that the charging companies have other income, so they are eligible for tax credits (refunds/reductions). For example, at the 40% tax rate, an annual loss of $10,000 will generate an offsetting $4,000 cash inflow due to the reduction of taxes (net cash flow-$6,000). 2. Analyze the following INDEPENDENT policy ideas to encourage investment in EV charging stations. Show the incremental effect on NPV of an average charging station and the effect on total income taxes/payments collected/paid collected by the Government. A. Reducing the corporate tax rate on new charging station profits to 30%. B. Charging no income taxes on new charging stations for the first 3 years. C. Allowing charging station companies to fully depreciate their initial investment in the first year for tax purposes. D. Providing free rent for charging stations at federal buildings. E. Federally guarantee loans to charging station companies thereby lowering their pre-tax cost of debt to 2%. As the weekly Monday cabinet meeting was about to begin, US President Joe Piden, opened the cabinet meeting with "Alright guys, we need a voter distraction from my disastrous poll numbers, out of control Inflation, the southern border mess, rising gas prices and the Afghanistan withdrawal debacle I haven't messed up the Russia/Ukraine conflict yet, but think it is safe to assume I will screw it up somehow. Vice President, Pamala Zarris, elegled in her irritating way, "Maybe killing the Keystone Pipeline was not such a great idea, eh Mr. Presidenti?". "Funny Pamalal Have you checked your approval ratings lately??....ICIS is polling highert You should be as concerned as I am; your future presidency is slipping from your gripl... so much for being the first female President of the United States?!" Pete Puttigieg ("Mayor Pete"), the Secretary of Transportation, chimed in, "You are so right Mr. President, we also need a distraction from the supply chain problems which I am point man on. Thank God, my adoption came through just in time so I could go on parental leave and dodge that bullet! The only thing being managed worse than the supply chain is the southern border, right Pamala?! "Alright, let's cut the chatter. You two can have a cage match later to decide who will replace me in 2024. It's obvious to the voters that none of us know what the hell we are doing. A distraction is what is needed here, and I guess if it fiscally makes sense, that is a bonus!" "Last week I visited Detroit and drove GM's Silverado and Ford's F150 EV pick-up trucks. I like big trucks! Driving them reminds me of my 1970 muscle car and makes me pine for better days when I did not have this crappy job. I wish I could just jump in one of those pickup trucks and drive away from this job, but it seems like I am stuck here for a few more years. So, here is what I am thinking. We build 100,000 charging stations and locate them in every voter swing state. The super wokes will love it. Maybe even AOC will give us a thumbs up...but probably not; she never seems to like anything I do. Let's hope she chokes on her dumb $1-$2 trillion student debt forgiveness plan! Pamala interjected "Mr. President, building all these charging stations will cost a few hundred million dollars and we are kind of spending a lot these days...remember the $2 trillion "Build Back Better Program? The public didn't really buy that it will cost nothing. Maybe we should look at a real zero investment options" "Good point. What were you thinking, Pamala?" "Let's encourage the private sector to build the charging stations. We can provide low interest loans to charging companies, accelerated write downs of equipment, or tax breaks. I mean they still cost the government, but most voters don't realize that and think they are costless-Easy to sell!" I was focusing on my marque achievement: a new stop sign in downtown South Bend at Main That is not a bad idea, Pamela (Your first since being elected Pete you were a superstar ut McKinsey Consulting, can you spin the numbers for us "Sure. I can do some NPV analysis of the options. I was actually working on a charine program while I was mayor of South Bend, so I have the data. I never quite finished the analysis because and Am. This analysis seems a bit more of a challenge, but I am up to it. I just hope another adoption doesn't sideline me just when you need me most." "NPV...Come on manII... slow down with the consulting speak"...make it so the man on the street can understand it as well the highbrow Wall Street crowd. Do some payback and ROI analysis as well so we can sell it to "main street." "Pete, get the analysis to me by tomorrow. If we can sell the voters on this, we can make the Afghanistan departure debacle a distant memory!" "Meeting adjourned! I don't want to miss my Beverly Hillbillies rerun...Elly May is getting married today!" 1. Calculate the NPV/payback and annualized Ror of an average EV charging station under the current conditions. What is the PV of the income taxes/payments collected/paid by the government for the 100,000 planned charging stations? The Government's cost of capital is 2%...governments don't pay taxes. Assume that the charging companies have other income, so they are eligible for tax credits (refunds/reductions). For example, at the 40% tax rate, an annual loss of $10,000 will generate an offsetting $4,000 cash inflow due to the reduction of taxes (net cash flow-$6,000). 2. Analyze the following INDEPENDENT policy ideas to encourage investment in EV charging stations. Show the incremental effect on NPV of an average charging station and the effect on total income taxes/payments collected/paid collected by the Government. A. Reducing the corporate tax rate on new charging station profits to 30%. B. Charging no income taxes on new charging stations for the first 3 years. C. Allowing charging station companies to fully depreciate their initial investment in the first year for tax purposes. D. Providing free rent for charging stations at federal buildings. E. Federally guarantee loans to charging station companies thereby lowering their pre-tax cost of debt to 2%