Question
Your city is expanding a public health program and must rent a location. You have a choice of two different locations with different leases offered.
Your city is expanding a public health program and must rent a location. You have a choice of two different locations with different leases offered. The first lease would last forever, cost $9 million now and then generates benefits, starting next year, of $1M forever. Another location has a lease that would last one year, cost $2M now and then generates benefits for the next year only, of $4M. The discount rate is 10%, and there is no inflation.
a) Calculate the NPV for each. Which do you recommend?
b) Assume the benefits of public health grow by 2% per year, beginning in year. Find NPV. Which do you recommend?
Step by Step Solution
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There are 3 Steps involved in it
Step: 1
a To calculate the Net Present Value NPV of each location we need to discount the future cash flows ...
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Industrial Relations in Canada
Authors: Fiona McQuarrie
4th Edition
978-1-118-8783, 1118878396, 9781119050599 , 978-1118878392
