let’s say that the Belizean government has determined that yearly benefits of creating a 20 nautical mile reserve are $100,000 due to increased tourism (200,000 Belizean dollars) and the costs are $200,000 in year 0 and $40,000 each subsequent year (enforcement costs and lost revenues for local fishers)
At what year would this project become viable (e.g. the Belizean government used a discount rate of 10%? Shoe work
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Question & Answer: let's say that the Belizean government has determined that yearly benefits of creating a 20 nautical mile…..
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|Year||Cash outflow||Cash inflow||Net Cash flow||PVIF @ 10%||PV of Cash inflow||Cumulative PV of Cash inflow/NPV|
|In year 3 the project become viable. Because the NPV of year 3 is positive (ie. 77686)|