Pollution Busters Inc is considering a purchase of 10 additional carbon sequesters for $106,000 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 pnce, the payoff after 1 year is $125.080 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 23% 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 18%, 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. Req A Reg 81 Reqs2 Suppose the government guarantees the price of carbon. At this price, the payoff after 1 year is $125,080 for sure. How would you determine the opportunity cost of capital for this investment? Opportunity cost of capital for this investment is determined by Req B1 > Pollution Busters Inc is considenng a purchase of 10 additional carbon sequesters for $106.000 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 $125,080 for sure. How would you determine the opportunny 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 23% She thinks this is a reasonable forecast for the tuture. What is the opportunity cost of capital in this case? b-2. If the expected return on the investment is still 18%, but instead depends on the price of carbon (so that it is no longer risk tree). 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 Red BI Reg 2 Suppose instead that the sequestered carbon has to be sold on the Landon 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 234. She thinks this is a reasonable forecast for the future. What is the opportunity cost of capital in this case? Opportunity cost of capital Red A Req B2) Pollution Busters Inc. is considering a purchase of 10 additional carbon sequesters for $106,000 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 $125080 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 23% 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 18%. but instead depends on the price of carbon (so that it is no longer nisk-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. Red A Req B1 Reg B2 If the expected return on the investment is still 18%, 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 Yes No