The stream of costs and benefits associated with two proposed natural resource projects in Prince Edward Island are presented in the tables below: Project PEI-Sweet Beach Year 0 Year 1 Year 2 Year 3 Costs $4,000,000 $2,000,000 $1,000,000 $0 Benefits $7,000,000 $8,000,000 $8,000,000 $8,000,000 Project PEI-Recreational Watershed Year 0 Year 1 Year 2 Year 3 Costs $6,000,000 $4,000,000 2,000,000 $0

Sep 8, 2023

The stream of costs and benefits associated with two proposed natural resource projects in Prince Edward Island are presented in the tables below: 

Project PEI-Sweet Beach

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The stream of costs and benefits associated with two proposed natural resource projects in Prince Edward Island are presented in the tables below: Project PEI-Sweet Beach Year 0 Year 1 Year 2 Year 3 Costs $4,000,000 $2,000,000 $1,000,000 $0 Benefits $7,000,000 $8,000,000 $8,000,000 $8,000,000 Project PEI-Recreational Watershed Year 0 Year 1 Year 2 Year 3 Costs $6,000,000 $4,000,000 2,000,000 $0
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  Year 0 Year 1 Year 2 Year 3
Costs $4,000,000  $2,000,000  $1,000,000  $0
Benefits $7,000,000  $8,000,000  $8,000,000  $8,000,000

 

Project PEI-Recreational Watershed

  Year 0 Year 1 Year 2 Year 3
Costs $6,000,000  $4,000,000  2,000,000  $0
Benefits $12,000,000  $9,500,000  $8,000,000  $6,000,000

 

  1. If the interest rate is 10%, use an Excel file to compute the net present values (NPV) of the two projects. Report your NPV results below

 

NPV for Project PEI Sweet Beach            = 

 

 

 

NPV for PEI-Recreational Watershed    = 

 

 

 

2. If the interest rate is 10%, which project would you advise the PEI government to implement and why?  

 

3. If the interest rate is 5%, use an Excel file to compute the net present values (NPV) of the two projects. Report your NPV results below 

 

NPV for Project PEI Sweet Beach            = 

 

 

 

NPV for PEI-Recreational Watershed    = 

 

 

 

4. If the interest rate is 5%, which project would you advise the PEI government to implement and why?

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