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The Moreton Bay City Council is contemplating a new urban green initiative aimed at planting trees and creating green spaces. To support this project the
The Moreton Bay City Council is contemplating a new urban green initiative aimed at planting trees and creating green spaces. To support this project the council will need to allocate funds for purchasing and planting trees, along with the necessary maintenance costs. The total cost of the project is estimated at $200,000. The project is expected to last for 5 years. The yearly maintenance and operating costs for this green initiative include: - Hiring two arborists - each working three (3) days per week, alternating schedules. Arborists are paid $30 per hour for a 7-hour workday. Prior to this employment, these arborists were unemployed. The opportunity cost was determined to be equivalent to 35% of the market wage. - An annual operating cost of $7,500 per year for watering, starting in the first year of the project. In addition to these costs and benefits, there is also an external benefit to consider. The presence of more green spaces in the region is expected to improve air quality and overall well-being. This is estimated to lead to annual health cost savings of $50,000 due to reduced pollution-related illnesses. If the appropriate discount rate is 6%, calculate the following perspectives for the cost-benefit analysis: a) The NPV of the Market CBA = b) The NPV of the Social CBA =$ c) The IRR of the Social CBA =$ d) The total discounted community benefit (PV of community benefit) is =$ e) Explain in detail whether the local council should accept/reject this project = (write accept/reject in the box and provide a detailed response in your spreadsheet). Provide all answers to 2 decimal places. Do not include a "," in your answers. Show all your working in your spreadsheet
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