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Essay / Research Paper Abstract
This 3 page paper is written in two parts. The first part looks at a project with a value of $1,000,000 in two years and shows how the net present value can be calculated. The second part uses a scenario and figures given by the student to perform a cost benefit analysis and assess if a project with worth completing.
Page Count:
3 pages (~225 words per page)
File: TS65_TEstnpvcb.doc
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Unformatted sample text from the term paper:
NPV at 5% = 1,000,000 = $907,029.5 (1.05)2 NPV at 6% = 1,000,000 = $ 889,996.4 (1.06)2 NPV at 7%= 1,000,000 = $
873,438.7 (1.07)2 This shows that as the interest rates increases the net present value decreases as the calculated time cost of money increases. Scenario 2 When assessing
the potential cost benefit ratio of a project it is necessary to calculate the different costs and the different benefits in order to bring them together in a single calculation.
1. The first cost is the windmills, if a minimum of 50 are needed at a cost of $150,000 each this gives a total cost for the first transaction of
$7,500.000. 2. The staff costs are given at $55,000 per member of staff over three years, with a requirement for ten staff embers, giving a staff cost of $550,000 3. There will
be costs of $35,000 per year over the three year period for each windmill, as there are 50 windmills this equates to $1,750,000 per year, which adds to $5,250,000 for
the three year period. 4. The forth item is the cost of shutting down the coal plant, this is a single cost item has been given as a single figure as
$1,000,000. 5. The decrease in productivity is as having a cost of $35 per hour, with the need for an additional 450 hours to be worked over the 3 years
being 450. This equates to a cost of $15,750. We are also told that three coals workers will loose their jobs, this does not have a direct impact on
the financial cost benefit apart from the wage saving. However although we have an hourly wage, without further details, such as number of hours worked per week, this cannot be
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