Problem # 7 (25 Points) Bubble Gum Inc., is a petrochemical company located in Galveston, Texas. The company recently secured a project which requires to install pipelines through one of the mid-west states. The new pipelines planned to go through one of the relatively economically stressed cities in the state. Bob Strong Built is newly elected mayor of this city and is asking the ISEN 210 students to advise him with the current situation In this city over 1/3 of residents (1,200 families) are unemployed and lost their jobs due to closing of some manufacturing facilities in town. Bubble Gum, Inc. plans to create 400 new positions from operating the heaving earth moving machineries to small heath care and childcare centers which bring over $25,000,000 income to this city for the next 15 years. Furthermore, the upfront investments for renovating the existing facilities and the new buildings is estimated to be $50,000,000. The City will collect 5,000,000 property taxes annually from the Bubble Gum Inc. and the homeowners collectively over the next 15 years and also the payroll tax generates an additional annual revenue of $5,000,000 for the next 15 years (project life is estimated to be 15 year) The pipeline needs to under a river which runs through the city and provides drinking water for residents and ranchers (cattle owners) after proper processing and also generates required water for agricultural needs including corn crops. If the pipes leak during the first 10 years, Bubble Gum Inc will repair and replace the damage systems including the weekly sampling and testing the drinking water. However, as the county civil engineers estimated the average life of pipes is about 10 years and after that the annual repair and maintenance costs for the City would be estimated to run about $1,500,000 If the pipe leaks and the river gets polluted, the polluted water can cause server health hazard and hospitalization. It has been estimated that cost of hospitalization and medical attention can annually cost the city about $10,000,000 between year 10 to 15 should the repair and maintenance responsibilities are transferred to the city (this cost mut be incorporated in your analysis) 1) of the interest rate is estimated to stay about 5% per year compounded annually, would you recommend this project to Mayor Bob Strong Built 2) If the project is approved by the City Hall , the Bubble Gum, Inc. is willing to build a Mansion for the Mayor and allocate $75,000 every three year for the Mayor to purchase a vehicle. What are the ethical issues come to your mind (detail discussion is required) and is there any conflict of 3) This project as described can vitalize this city economically where otherwise, the unemployment could rise to 50% over the next five to 10 years. Base on the number you are calculating under Part (), what would you be the economic and societal impacts of this project? (a detali discussion is required)" 4) What type of terms would you recommend for inclusion in the city's contract with the Bubble Gum Inc, to ensure your proposed solutions meet the health, safety, and welfare of the residents? You are encouraged to identify some resources in library or other public media to support your recommendations Interest? Problem # 7 (25 Points) Bubble Gum Inc., is a petrochemical company located in Galveston, Texas. The company recently secured a project which requires to install pipelines through one of the mid-west states. The new pipelines planned to go through one of the relatively economically stressed cities in the state. Bob Strong Built is newly elected mayor of this city and is asking the ISEN 210 students to advise him with the current situation In this city over 1/3 of residents (1,200 families) are unemployed and lost their jobs due to closing of some manufacturing facilities in town. Bubble Gum, Inc. plans to create 400 new positions from operating the heaving earth moving machineries to small heath care and childcare centers which bring over $25,000,000 income to this city for the next 15 years. Furthermore, the upfront investments for renovating the existing facilities and the new buildings is estimated to be $50,000,000. The City will collect 5,000,000 property taxes annually from the Bubble Gum Inc. and the homeowners collectively over the next 15 years and also the payroll tax generates an additional annual revenue of $5,000,000 for the next 15 years (project life is estimated to be 15 year) The pipeline needs to under a river which runs through the city and provides drinking water for residents and ranchers (cattle owners) after proper processing and also generates required water for agricultural needs including corn crops. If the pipes leak during the first 10 years, Bubble Gum Inc will repair and replace the damage systems including the weekly sampling and testing the drinking water. However, as the county civil engineers estimated the average life of pipes is about 10 years and after that the annual repair and maintenance costs for the City would be estimated to run about $1,500,000 If the pipe leaks and the river gets polluted, the polluted water can cause server health hazard and hospitalization. It has been estimated that cost of hospitalization and medical attention can annually cost the city about $10,000,000 between year 10 to 15 should the repair and maintenance responsibilities are transferred to the city (this cost mut be incorporated in your analysis) 1) of the interest rate is estimated to stay about 5% per year compounded annually, would you recommend this project to Mayor Bob Strong Built 2) If the project is approved by the City Hall , the Bubble Gum, Inc. is willing to build a Mansion for the Mayor and allocate $75,000 every three year for the Mayor to purchase a vehicle. What are the ethical issues come to your mind (detail discussion is required) and is there any conflict of 3) This project as described can vitalize this city economically where otherwise, the unemployment could rise to 50% over the next five to 10 years. Base on the number you are calculating under Part (), what would you be the economic and societal impacts of this project? (a detali discussion is required)" 4) What type of terms would you recommend for inclusion in the city's contract with the Bubble Gum Inc, to ensure your proposed solutions meet the health, safety, and welfare of the residents? You are encouraged to identify some resources in library or other public media to support your recommendations Interest