The city government considers investing on a theme park to be located near the shore. The estimated contract cost is $200M. Those living along the shoreline must be compensated accordingly and the government projects that they need to spend about $50M to give out to the families. The theme park must be maintained by the contractor at a price $2M per year. When the theme park is fully operational, it will accommodate 10,000 tourists per month, and will have an average net sales of $350,000 from ticket sales, less 10% for government taxes. Opening a theme park will also attract more investors within the area due to high volume of tourists and the government estimates to receive $500,000 yearly from the investors. Use B-C ratio to assess the acceptability of the proposal. Use a 15-year study period. MARR is 10% per year.

The city government considers investing on a theme park to be located near the shore. The estimated contract cost is $200M. Those living along the shoreline must be compensated accordingly and the government projects that they need to spend about $50M to give out to the families. The theme park must be maintained by the contractor at a price $2M per year. When the theme park is fully operational, it will accommodate 10,000 tourists per month, and will have an average net sales of $350,000 from ticket sales, less 10% for government taxes. Opening a theme park will also attract more investors within the area due to high volume of tourists and the government estimates to receive $500,000 yearly from the investors. Use B-C ratio to assess the acceptability of the proposal. Use a 15-year study period. MARR is 10% per year.

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter17: Long-term Investment Analysis

Section: Chapter Questions

Problem 3E

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Similar questions

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