B D E F G H 1 K L M N 0 A Fixing our Environment Externalty enterprises are contemplating how to react to California regulations regarding their proposed oil refinery in Redwood City They face two options. Under option A the initial investment would cost $0.88 (S800M) to build without fully meeting regulatory requirements. The unit price and variable cost per barrel of this product is estimated to be $150 and 5100 respectively. While California would permit this facility to be buit, Externalty would have to pay a penalty of $15M per year after taxes Under Option B, the initial outloy for the oil refinery would triple to $24 B ($2.400M). However, wth the added cost, there would be improvements with regard to increased operating officiencies and perceived quality 9 Estates suggest that the variable cost per barrel of product would be reduced to $75 and the price that Externalty could charge customers would be raised to $200 per barrel 10 lasty, there would not be the annual $15M fee imposed by the State of Calfornia 11 12 13 Under both condition, they would expect to produce and soli 5 millon barrels per year. Additionally, the initial investment would be expected to have a useful life of 20 years, 14 without any salvage value at the end of the 20 years for depreciation purposes, straight-line depreciation would be used 15 The tax rate a 40% and me cost of capitais 16% for both options. Lastly, the prong variable costs and demand lovels are estimated to be constant for the next 20 years 10 17 18. Which option should Externalty choose that would maximize Exteritystnancial value? How did the Calfomnia penaly (516M annually affect your recommendation? 19 Please support your recommendation with a Net Present Value calculation using discounted cash flow analysis 20 21 (A suggestion ep your answers in the million don't get wrapped up around at the zero, you may want to look at 3-33 and 3-35 os iu proti bod between the moj 22 24 25 20 29 30 31 22 Carlo we Sun Home Design Layout References Mailings Review View Cab Body 12 . A A AaBbce AC AaBbc stico B 1 U bex I I Fixing our Environment Externally enterprises are contemplating how to react to California regulations regarding their proposed oil refinery in Redwood City They face two options. Under option A, the initial Investment would cost $0.00 (SCOM) to build without my meeting regulatory requirements. The unit price and variable cost per barrel of this product is estimated to be $150 and 5100 respectively. While California would permit this facility to be built Extmaily would have to pay a penalty of $15M per year after taxes Unde Option B. the risal olay for the oil refinery would triple to $2.48 (52.400M). However, with the added cout, there would be improvements with regard to increased Operating efficiencies and perceived Estimates suggest that the variable cost per barrel of product would be reduced to $75 and the price that Externality could charge customers would be raised to $200 per barrel Lastly, there would not be the annual $15M fee mposed by the State of Calfomnia Linder both conditions, they would expect to produce and sell 5 million barrels per year. Additionally, the initial Investment would be expected to have a solo of 20 year without any selvage value of the end of the 20 years for depreciation purposes, straight-ine depreciation would be used The tax rate is 40% and the cost of capital is 18% for both options. Lastly, the pricing, variable costs and demand have to estimated to be constant for the next 20 years Which option should Extemay choose that would maximie Externality's financial value? How did the Calfomia penalty ($15 annuwiyafect your recommendation Please support your recommendation with a Net Present Valve calculation using discounted cash flow analysis A suggestion knop your answers in the million don't get wrapped up around all the zoros; also, you may www to look at 3:37 and 3.38 a. me problema a blend beneen the two 315 AN Bring our Environment Externalty enterprises are contemplating how to react to California regulations regarding their proposed of refinery in Redwood Cty They face two options. Under option A, the initial investment would cost $0.88 (5000M) to build without fully meeting regulatory requirements. The price and variable con er barrel of this product is estimated to be $150 and 5100 respectively. While Caitomia would permit this facility to be buit, Extermality would have to pay a penalty of 15 weer af Inder Options, the inal outlay for the oil refinery would triple to $2.4 D ($2.400M). However, with the added cost, there would be improvements with regard to increased construcie wd perceived quality Estimates suggest that the variable cost per barrel of product would be reduced to $75 and the price the Externwey could churpe culomers would be raised to $200 per barrel astly, there would not be the annual $15M for imposed by the State of California Inder both conditions, they would expect to produce and sell milion barrels per your. Addition, the initim investment would be expected to have a useful le of 20 years without any salvage valse at the end of the 20 years, for depreciation purposes, straight line depreciation would be used The tax rato is 40% and the cost of capital is 18% tor bon options. Lastly, the pricing, vortable costs and demand levels wre estimated to be constant for the most 20 years Which option should Externalty choose that would maximize Externalty's financial value? How did the California penalty (515M analy) wifect your recommendation? lease support your recommendation with a Net Present Value calculation using discounted cash flow analysis suggestion koep your answers in the millions don't get wapped up around all the zeros, also, you may want to look af 3-33 and 3-35 as this problem is a blend been the two). B D E F G H 1 K L M N 0 A Fixing our Environment Externalty enterprises are contemplating how to react to California regulations regarding their proposed oil refinery in Redwood City They face two options. Under option A the initial investment would cost $0.88 (S800M) to build without fully meeting regulatory requirements. The unit price and variable cost per barrel of this product is estimated to be $150 and 5100 respectively. While California would permit this facility to be buit, Externalty would have to pay a penalty of $15M per year after taxes Under Option B, the initial outloy for the oil refinery would triple to $24 B ($2.400M). However, wth the added cost, there would be improvements with regard to increased operating officiencies and perceived quality 9 Estates suggest that the variable cost per barrel of product would be reduced to $75 and the price that Externalty could charge customers would be raised to $200 per barrel 10 lasty, there would not be the annual $15M fee imposed by the State of Calfornia 11 12 13 Under both condition, they would expect to produce and soli 5 millon barrels per year. Additionally, the initial investment would be expected to have a useful life of 20 years, 14 without any salvage value at the end of the 20 years for depreciation purposes, straight-line depreciation would be used 15 The tax rate a 40% and me cost of capitais 16% for both options. Lastly, the prong variable costs and demand lovels are estimated to be constant for the next 20 years 10 17 18. Which option should Externalty choose that would maximize Exteritystnancial value? How did the Calfomnia penaly (516M annually affect your recommendation? 19 Please support your recommendation with a Net Present Value calculation using discounted cash flow analysis 20 21 (A suggestion ep your answers in the million don't get wrapped up around at the zero, you may want to look at 3-33 and 3-35 os iu proti bod between the moj 22 24 25 20 29 30 31 22 Carlo we Sun Home Design Layout References Mailings Review View Cab Body 12 . A A AaBbce AC AaBbc stico B 1 U bex I I Fixing our Environment Externally enterprises are contemplating how to react to California regulations regarding their proposed oil refinery in Redwood City They face two options. Under option A, the initial Investment would cost $0.00 (SCOM) to build without my meeting regulatory requirements. The unit price and variable cost per barrel of this product is estimated to be $150 and 5100 respectively. While California would permit this facility to be built Extmaily would have to pay a penalty of $15M per year after taxes Unde Option B. the risal olay for the oil refinery would triple to $2.48 (52.400M). However, with the added cout, there would be improvements with regard to increased Operating efficiencies and perceived Estimates suggest that the variable cost per barrel of product would be reduced to $75 and the price that Externality could charge customers would be raised to $200 per barrel Lastly, there would not be the annual $15M fee mposed by the State of Calfomnia Linder both conditions, they would expect to produce and sell 5 million barrels per year. Additionally, the initial Investment would be expected to have a solo of 20 year without any selvage value of the end of the 20 years for depreciation purposes, straight-ine depreciation would be used The tax rate is 40% and the cost of capital is 18% for both options. Lastly, the pricing, variable costs and demand have to estimated to be constant for the next 20 years Which option should Extemay choose that would maximie Externality's financial value? How did the Calfomia penalty ($15 annuwiyafect your recommendation Please support your recommendation with a Net Present Valve calculation using discounted cash flow analysis A suggestion knop your answers in the million don't get wrapped up around all the zoros; also, you may www to look at 3:37 and 3.38 a. me problema a blend beneen the two 315 AN Bring our Environment Externalty enterprises are contemplating how to react to California regulations regarding their proposed of refinery in Redwood Cty They face two options. Under option A, the initial investment would cost $0.88 (5000M) to build without fully meeting regulatory requirements. The price and variable con er barrel of this product is estimated to be $150 and 5100 respectively. While Caitomia would permit this facility to be buit, Extermality would have to pay a penalty of 15 weer af Inder Options, the inal outlay for the oil refinery would triple to $2.4 D ($2.400M). However, with the added cost, there would be improvements with regard to increased construcie wd perceived quality Estimates suggest that the variable cost per barrel of product would be reduced to $75 and the price the Externwey could churpe culomers would be raised to $200 per barrel astly, there would not be the annual $15M for imposed by the State of California Inder both conditions, they would expect to produce and sell milion barrels per your. Addition, the initim investment would be expected to have a useful le of 20 years without any salvage valse at the end of the 20 years, for depreciation purposes, straight line depreciation would be used The tax rato is 40% and the cost of capital is 18% tor bon options. Lastly, the pricing, vortable costs and demand levels wre estimated to be constant for the most 20 years Which option should Externalty choose that would maximize Externalty's financial value? How did the California penalty (515M analy) wifect your recommendation? lease support your recommendation with a Net Present Value calculation using discounted cash flow analysis suggestion koep your answers in the millions don't get wapped up around all the zeros, also, you may want to look af 3-33 and 3-35 as this problem is a blend been the two)