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! Required information [ The following information applies to the questions displayed below. ] Washington County's Board of Representatives is considering the construction of a
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The following information applies to the questions displayed below.
Washington County's Board of Representatives is considering the construction of a longer runway at the county airpor: Currently, the airport can handle only private aircraft and small commuter jets. A new, long runway would enable the airport to handle the midsize jets used on many domestic flights. Data pertinent to the board's decision appear below.In addition to the preceding data, two other facts are relevant to the decision. First, a longer runway will require a new snowplow, which will cost $ The old snowplow could be sold now for $ The new, larger plow will cost $ more in annual operating costs. Second, the County Board of Representatives believes that the proposed long runway, and the major jet service it will bring to the county, will increase economic activity in the community. The board projects that the increased economic activity will result in $ per year in additional tax revenue for the county.
In analyzing the runway proposal, the board has decided to use a year time horizon. The county's hurdle rate for capital projects is percent.
Use Appendix A for your reference.
Required:
Prepare a netpresentvalue analysis of the proposed long runway.
Should the County Board of Representatives approve the runway considering NPV
Which of the data used in the analysis are likely to be most uncertain? Which are likely to be least uncertain?
Complete this question by entering your answers in the tabs below.
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Prepare a netpresentvalue analysis of the proposed long runway.
Note: Round your "Annuity discount factor" to decimal places. Amounts to be deducted should be indicated by a minus sign.
tableAnnual incremental benefit,Annuity discount factor,Present value of annual benefits,Initial costs:,
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