Consider a hypothetical investment in an education project with the following specifications: • Initial capital investment of $700,000 at present. • Staff salaries and other variable costs at $120,000 per

Consider a hypothetical investment in an education project with the following specifications: • Initial capital investment of $700,000 at present. • Staff salaries and other variable costs at $120,000 per year in 2023-25. • Opportunity cost in terms of foregone earnings for students estimated at $50,000 per year in total in 2023-25. • Increased earnings to graduates of the program estimated at $100,000 per year in 2026-30. • Intangible benefits estimated at $180,000 per year between 2024-2027. • Assume the nominal cost of borrowing for this project is 6% per year, while the rate of inflation is projected at 2% per year. • All costs and benefits are projected to net of inflation and are always realized at the beginning of the year. The present date is the beginning of 2022. Calculate the Net Present Value for this project. Would you advise the government to undertake this investment or not? Explain.

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