Cedarstan is a country that exists on the Meditilinian Sea that has been hit with a pandemic called COVID. Prior to COVID Cedarstan had a GDP of $20 Bn has lead to a preliminary drop in 10% of the GDP in the and 15% in the 2nd year. Moreover, the MOPH had to distribute Personal Protective Equipment (PPE) with an annual cost of $0.5 Bn for the next two years. The government will have to distribute PPE regardless option selected. The market interest rate is 2.5%. To battle the pandemic Cedarstan government has two options: 1. Do nothing which would get a lot of people sick and lead to 20% further losses above and over the preliminary losses mentioned above. These losses will be incurred for two years. 2. Have a lockdown which would lead to further losses of 35% in the GDP for the first year and 5% for the next year above and over the preliminary losses Find the NPV of the lockdown in Billion USD. O -6.83 O +20.21 O -20.21 O +6.83

Cedarstan is a country that exists on the Meditilinian Sea that has been hit with a pandemic called COVID. Prior to COVID Cedarstan had a GDP of $20 Bn has lead to a preliminary drop in 10% of the GDP in the and 15% in the 2nd year. Moreover, the MOPH had to distribute Personal Protective Equipment (PPE) with an annual cost of $0.5 Bn for the next two years. The government will have to distribute PPE regardless option selected. The market interest rate is 2.5%. To battle the pandemic Cedarstan government has two options: 1. Do nothing which would get a lot of people sick and lead to 20% further losses above and over the preliminary losses mentioned above. These losses will be incurred for two years. 2. Have a lockdown which would lead to further losses of 35% in the GDP for the first year and 5% for the next year above and over the preliminary losses Find the NPV of the lockdown in Billion USD. O -6.83 O +20.21 O -20.21 O +6.83

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter17: The Management Of Cash And Marketable Securities

Section: Chapter Questions

Problem 5P

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