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FULL WORK AND FORMULAS NEED TO BE SHOWN no excel CVC supplies power to the city of Cali in Columbia, South America. They are planning
FULL WORK AND FORMULAS NEED TO BE SHOWN no excel
CVC supplies power to the city of Cali in Columbia, South America. They are planning to build a dam to meet the citys burgeoning power needs. The dam will cost $ million up front to build and will begin producing electricity the following year. The production of electricity is valued at $yr and the dam will produce a constant value for years at which time it must be closed due to siltation.
a If the real interest rate is what is the net present value of the project? At
b What is the annuity stream equivalent of this net present value? At At
c CVC is contemplating subsidizing large scale pine plantations by private landowners who own the surrounding denuded hillsides. Colombian hydrologist have estimated that an initial $ million dollar subsidy at the time of building will be dam increase the longevity of the project years. This will result in an extra years of annual returns of yr What is the net present value of this supplemental investment at and
NPV of project at ; At
Annuity Stream equivalent at ; at
NPV of supplemental investment at ; At
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