Net present value methodology when creating a cost-benefit analysis to evaluate the following project
net present value methodology when creating a cost-benefit analysis to evaluate the following project
Use the net present value methodology when creating a cost-benefit analysis to evaluate the following project:
The State of Massachusetts would like to replace a National Guard armory rapidly reaching the end of its service life. The Department of Military Affairs has been told that continued special maintenance would be $275,000 annually. Rehabilitation of facility would cost $4,000,000, and would extend the armory’s service life by 15 years.
1. Calculate the discount factor for each year (use 4% discount rate @ 15 years)
2. Calculate the annual present value cost of maintenance (15 years)
3. Calculate the discounted benefit of rehabilitating the armory
4. Given the discounted cost of rehabilitation, what is the benefit/cost ratio for the proposal?
Be sure to include information regarding the following items when completing your evaluation of the project:
• the objectives of the project
• the demand and consumer surplus of the project
• a categorization of the project expenses
• an estimation of potential delays
In addition to fulfilling the specifics of the assignment, a successful paper must also meet the following criteria:
o Include a cover page and references page in 10-12 point font (Arial, Courier, and Times New Roman are acceptable)
o Viewpoint and purpose should be clearly established and sustained
o Assignment should follow the conventions of Standard American English (correct grammar, punctuation, etc.)
o Writing should be well ordered, logical and unified, as well as original and insightful
o Your work should display superior content, organization, style and mechanics
o Appropriate citation style should be followed.
You should also make sure to:
o Include a title page with full name, class name, section number and date
o Include an introductory and concluding paragraph and demonstrate college-level communication through the composition of original materials in Standard American English
o Use examples to support your discussion
o Cite all sources on a separate reference page at the end of your paper and cited within the body of your paper using APA format
Lastly, please label your projects: username-project-unit#.doc. For example, a student named Tina Allen would name her file TAllen-Anatomical Terminology-Unit 9.doc. Submit your assignment by selecting the Unit 9: Assignment dropbox by the end of Unit 9.
Checklist for the Unit 9 Assignment
Criteria: Ask yourself the following questions. Not Yet Yes
Did you identify the objectives of the project?
Did you apply knowledge of demand and consumer surplus to determine the value of a proposed project/program, to establish values enabling the calculation of estimates of the value of expected benefits, and to properly categorize expected project expenses and the effect of project delays or timing issues on total project costs?
Did you estimate the value of non-marketed benefits associated with the project?
Did you create a summary table for the proposed project including relevant project objectives or project/program costs and included the effects of future changes in valuation to establish clear comparisons of total project costs and benefits?
Did you demonstrate the net present value of the project/program compared to the net present value without the project/program?
Is your research current?
Did you discuss all the required areas in a substantive manner?
Did you use appropriate reference material to support major statements?
Is your content complete enough to address the topic and questions?
Is there a logical flow to your ideas?
Did you present the material in a clear and concise manner to provide easy readability?
Did you prepare your project as a Microsoft Word document?
Did you label your file correctly?
Did you use APA format to cite your sources?
Did you check your document for grammar and spelling?