Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

turkish govermnet is now planning to initiate a national budget savings program to construct canal istanbul. Auction will be announced just after 5 yeras from

turkish govermnet is now planning to initiate a national budget savings program to construct "canal istanbul". Auction will be announced just after 5 yeras from now. Consortiums, each made up of 3 foreinngs and 2 national construction companies willbe allowed to participate in the auction process. As the construction begins , canal is expected to be complete in 4 years. Currently the anual construction cost for everthing is 15 billion tl, but these cost are expected to increase by 5 percent anually. after the auction process is complete the winning constrium will require that this amaount be paid at the start of the year. Public bank X will be responsible for all transactions and payments. Turkish teasury now has 7.50 billion tl in this bank account that pays 6 percent annually. Govermnet must save annual deposite in this bank from its regular annual taxes. the govermnet must make 6 equal annual deposite into this account, the 1st deposite today and the 6th on the day when construction begins.
a)in order for a succesful completion of canal istanbul, how large must each of the 6 depoiste payments be?
b) canal istanbul is expected to earn 10 billion tl per year after the construction is complete. How much time it will take for the canal to pay itself back?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

a To calculate the size of each of the 6 deposit payments we need to determine the present value of ... blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

International Marketing And Export Management

Authors: Gerald Albaum , Alexander Josiassen , Edwin Duerr

8th Edition

1292016922, 978-1292016924

More Books

Students also viewed these Finance questions

Question

Extend the classic cuckoo hash table to use d hash functions.

Answered: 1 week ago