Your boss believes the company's power plant is producing too much air pollution on a typical...

Your boss believes the company's power plant is producing too much air pollution on a typical island. Your boss gives you three choices for dealing with this problem because he/she does not want to deal with it: You can pay a pollution tax (Carbon Offsets) one time of $13,000,000 immediately. You can close the plant and install a power cable from the mainland to the Island. That will cost you $1,000,000 at the end of this year, $3,000,000 at the end of next year and then $750,000 forever for maintenance. You can retrofit the plant with scrubbers to reduce the emissions to make the plant green. That will cost $7.5m at the end of this year and $100,000 for 50-years for maintenance. Assume that the cost of generating power on the mainland is approximately the same as the cost of generating power at the Island's plant. Assume, this comes as a surprise to you and you, have not saved any money in reserves, and you need to raise capital. Additional information is that market has a 12 percent market risk premium on the power plant with the risk-free rate being 5 percent with a company tax rate of 35 percent. Current total raised capital at the power plant: (This will help you calculate the WACC) Debt – 7,000 outstanding bonds, at 7.5% coupon and 20 years to maturity. These bonds pay interest semiannually and quoted a price of 108 percent of par. Common Stock -180,000 shares outstanding, selling for $50 per share: Beta .90. Preferred Stock – 8,000 shares of 5.5 percent preferred stock outstanding, currently selling for $95.00 per share. Please answer in essay format and provide your Excel document showing all your calculation in appendixes choose the best option for Island. Support your answer with your calculations. Also, to calculations use specified resources, other appropriate scholarly resources, including older articles. Length: However long you need to answer the question

plz answer in essay form thank you

Expert Solution

jeff jeffy answered 10 months ago

Your boss believes the company's power plant is producing too much air pollution on a typical...

Your boss believes the company's power plant is producing too much air pollution on a typical island. Your boss gives you three choices for dealing with this problem because he/she does not want to deal with it: You can pay a pollution tax (Carbon Offsets) one time of $13,000,000 immediately. You can close the plant and install a power cable from the mainland to the Island. That will cost you $1,000,000 at the end of this year, $3,000,000 at the...

Your power plant on Gilligan’s Island is producing too much air pollution. The professor gives you...

Your power plant on Gilligan’s Island is producing too much air pollution. The professor gives you three choices for dealing with this problem: You can pay a pollution tax (Carbon Offsets) onetime of $13,000,000 immediately. You can close the plant and install a power cable from the mainland to the Island. That will cost you $1,000,000 at the end of this year, $3,000,000 at the end of next year and then $750,000 forever for maintenance. You can retrofit the plant...

You are considering three methods for producing steam in your company's manufacturing plant, all of which...

You are considering three methods for producing steam in your company's manufacturing plant, all of which are repeatable. Revenues will be the same regardless of the method chosen. An oil boiler costs $300,000 and it has a useful life of six years. The costs of operating the oil boiler require after-tax cash flows of $250,000 per year. A gas boiler costs $200,000 and it has a useful life of five years. The costs of operating the gas boiler require after-tax...

A psychologist believes that students’ test scores will be affected if they have too much caffeine...

A psychologist believes that students’ test scores will be affected if they have too much caffeine before taking an exam. To examine this, she has a sample of n = 15 students drink five cups of coffee before taking an exam. She uses an exam that has a population mean of µ = 72 and a population standard deviation s = 3. The mean test score for the sample of 15 students who drank five cups of coffee before taking...

Do you think the president has too much power as Commander In Chief? Not enough power?...

Do you think the president has too much power as Commander In Chief? Not enough power? Do you believe the War Powers Act to be constitutional or unconstitutional?

Discuss whether administrative agencies have too much power. Why or why not?

A coal with the following composition was burnt in a power plant with 25.0% excess air....

A coal with the following composition was burnt in a power plant with 25.0% excess air. Waht is the percent CO2 shown by Orsat analysis? The air drawn into the furnace at that location has 0.021 moles of water vapor per mole of dry air. Coal analysis: Carbon 64.0%; Hydrogen 4.3%; Nitrogen 1.1%; Sulfur 1.6%. The lab also reported that the coal contained 5.0% moisture and 13.7% ash.

It has been argued that business has too much power that, once exercised, even in a...

It has been argued that business has too much power that, once exercised, even in a responsible manner, distorts the balance of political power in the country. Discuss both sides of this issue. Where do you stand? Explain your position and the reasoning behind it.

Your friend believes that the government should not try to reduce the pollution amount in companies....

Your friend believes that the government should not try to reduce the pollution amount in companies. He believes every single environmental regulation is bad. Write a response (5-8 sentences) about why it is socially efficient for there to be efforts to reduce pollution. (Make sure to use some economic terms in your response).

Do the Courts have too much power to make policy from the bench? Consider issues such...

Do the Courts have too much power to make policy from the bench? Consider issues such as abortion, equal access to education, the use of religious symbols in public schools, etc. Should decisions on controversial issues like these be made by Courts or by Legislators? Why? Illustrate your answer with your own research.

Question

Your boss believes the company's power plant is producing too much air pollution on a typical...

Solutions

Expert Solution

Related Solutions

Your boss believes the company's power plant is producing too much air pollution on a typical...

Your power plant on Gilligan’s Island is producing too much air pollution. The professor gives you...

You are considering three methods for producing steam in your company's manufacturing plant, all of which...

A psychologist believes that students’ test scores will be affected if they have too much caffeine...

Do you think the president has too much power as Commander In Chief? Not enough power?...

Discuss whether administrative agencies have too much power. Why or why not?

A coal with the following composition was burnt in a power plant with 25.0% excess air....

It has been argued that business has too much power that, once exercised, even in a...

Your friend believes that the government should not try to reduce the pollution amount in companies....

Do the Courts have too much power to make policy from the bench? Consider issues such...