With tradable emissions permits, the main problem is to determine the _____, while with emissions taxes the main problem is to d
1 answer:
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Answer:
Ans.
a) The value today if the payments occured for 15 years would be:$65,072.07
b) The value today if the payments occured for 40 years would be: $100,810.19
c) The value today if the payments occured for 75 years would be: $110,254.18
d) The value today if the payments occured forever would be: $111,666.67
Explanation:
Hi, except for c) (we´ll talk about later about c.) the equation that we need to use is:
Where:
A = Annuity (yearly payment, in our case $6,700)
r = Discount rate (in our case 6% or 0.06 for the formula)
n = Period of time (for a) is 15, b) is 40, c) is 75)
So, let´s solve a)
For b) is:
For c) is:
Finally, for d) which is if the payments were made forever, the formula would be:
So the present value if this payments were made forever would be:
Best of luck.