Pollution Busters Inc. is considering a purchase of 10 additional carbon sequesters for $111,000 aplece. The sequesters last for only 1 year before becoming saturated. Then the carbon is sold to the government a. Suppose the government guarantees the price of carbon At this price, the payoff after 1 year is $128,760 for sure. How would you determine the opportunity cost of capital for this investment? b-1. Suppose instead that the sequestered carbon has to be sold on the London Carbon Exchange Carbon prices have been extremely volatile, but Pollution Busters CFO learns that average rates of return from investments on that exchange have been about 21%. She thinks this is a reasonable forecast for the future. What is the opportunity cost of capital in this case? b-2. If the expected return on the investment is still 16%, but instead depends on the price of carbon (so that it is no longer risk-free). then is the purchase of additional sequesters an attractive investment for the firm? Complete this question by entering your answers in the tabs below. REGA Reg 01 Reg 2 Suppose the government guarantees the price of carbon. At this price, the payoff after 1 year is $128,760 for sure. How would you determine the opportunity cost of capital for this investment? Opportunity cost of capital for this investment is determined by Reg 1 > Pollution Busters Inc is considering a purchase of 10 additional carbon sequesters for $111.000 aplece. The sequesters last for only 1 year before becoming saturated. Then the carbon is sold to the government a. Suppose the government guarantees the price of carbon. At this price, the payoff after 1 year is $128.760 for sure. How would you determine the opportunity cost of capital for this investment? b-1. Suppose instead that the sequestered carbon has to be sold on the London Carbon Exchange Carbon prices have been extremely volatile, but Pollution Busters' CFO learns that average rates of return from investments on that exchange have been about 21% She thinks this is a reasonable forecast for the future. What is the opportunity cost of capital in this case? b-2. it the expected return on the investment is still 6% but instead depends on the price of carbon (so that it is no longer risk free then the purchase of additional sequesters an attractive investment for the tim? Complete this question by entering your answers in the tabs below. Req Reg 1 Req 82 Suppose instead that the sequestered carbon has to be sold on the London Carbon Exchange Carbon prices have been extremely volatile, but Pollution Busters' CFO learns that average rates of return from investments on that exchange have been about 21%. She thinks this is a reasonable forecast for the future. What is the opportunity cost of capital in this case? Opportunity cost of capital ReqA Reg B2 > Pollution Busters Inc is considering a purchase of 10 additional carbon sequesters for $111,000 apiece. The sequesters last for only 1 year before becoming saturated. Then the carbon is sold to the government o. Suppose the government guarantees the price of carbon. At this price, the payoff after 1 year is $128,760 for sure. How would you determine the opportunity cost of capital for this investment? b-1. Suppose instead that the sequestered carbon has to be sold on the London Carbon Exchange Carbon prices have been extremely volatile, but Pollution Busters' CFO learns that average rates of return from investments on that exchange have been about 21%. She thinks this is a reasonable forecast for the future What is the opportunity cost of capital in this case? b-2. If the expected return on the investment is still 16%, but instead depends on the price of carbon (so that it is no longer risk-free) then is the purchase of additional sequesters an attractive investment for the firm? Complete this question by entering your answers in the tabs below. Reg A Reg B1 Lea 2 If the expected return on the investment is still 16%, but instead depends on the price of carbon (co that it is no longer risk free), then is the purchase of additional sequesters an attractive investment for the firm? Yos No
