# Duke Energy has 14 coal sites throughout the state of North Carolina. Removing the coal ash from the sites has high costs today and provides possible future benefits. You are tasked with advising the governor of North Carolina on whether to require Duke Energy clean up all of its coal ash sites. The benefit of cleaning up the sites is the reduced risk of a potential spill and the costs associated with a spill.All numbers are in real dollars (inflation corrected) and are expressed in present value terms (no need to discount- this has been done for you). Here are the facts: Cost of cleaning up coal ash sites is \$30 million today. If the coal ash is not cleaned up a. There is a 10% chance the coal ash ponds flood and causes \$70 million dollars in damages. b. There is a 20% chances the coal ash seeps into the ground water causing \$100 million in damages. c. There is a 70% chance the coal ash sites cause no damage to the state of North Carolina. 1. What is the expected benefit of cleaning up the coal ash site (i.e. how much do we expect to avoid in future damages)? 2. What sort of analysis would you undertake to advise the governor? Would you recommend the governor require Duke clean up the coal ash sites? (no need to complete calculation, just write the formula used for decision making)?

1) expected benefits of cleaning up coal ash site is \$27 million

2) The expected benefits of cleaning the site are less than the costs of cleaning them (\$30 million cost > \$27 million benefits). But the problem is that the cleaning costs will be covered by Duke Energy today, but in the future, there is a risk that the costs will be covered by the state government. Companies are not eternal and even industry leaders like Kodak, Sears, Toys R Us, Radio Shack, GM, etc., have gone bankrupt. The difference between the costs and the benefits is not that large to risk the state government having to pay for the cleaning costs in the future.

Explanation:

Costs of cleaning coal ash \$30 million

Expected benefits form cleaning coal ash:

• \$70 million x 10% = \$7 million
• \$100 million x 20% = \$20 million
• \$0 x 70% = \$0
• total benefits = \$27 million

## Related Questions

The skill you’re focusing on this week is:

could you explain some more please

Mila is helping to set performance targets for her company, Urban Supply. The target of increasing the company's online customer satisfaction rate by 1% in the next quarter is an example of a performance target focused on the customer perspective of the balance scorecard.a. true
b. false

Explanation:

The balanced scorecard perspective implies that the company has to satisfy their customer through the provision of quality products and services.

From the question, the target of increasing customers satisfaction is a good example of a performance target that is focused on customer's perspective of the balance scorecard. This means that the statement is true.

Suppose you buy lunch for \$15.40 that includes a 8% sales tax. How much did the restaurant charge you for the lunch (excluding any tax) and how much does the restaurant owe for sales tax?a. \$16.10 for lunch and \$1.19 for sales tax.b. \$14.81 for lunch and \$1.29 for sales tax.c. \$16.10 for lunch and \$1.29 for sales tax.d. \$14.91 for lunch and \$1.19 for sales tax.

Explanation:

Based on the scenario in the question, the amount that the restaurant charge for the lunch excluding any tax will be calculated as:

= \$15.40 × 100/(100 + 8)

= \$15.40 × 100/108

= \$1540/108

= \$14.26

Sales tax will be:

= \$15.40 × 8%

= \$15.40 × 8/100

= \$15.40 × 0.08

= \$1.23

Your uncle will sell you his bicycle shop for \$250,000, with "seller financing," at a 6.0% nominal annual rate. The terms of the loan would require you to make 12 equal end-of-month payments per year for 4 years, and then make an additional final (balloon) payment of \$50,000 at the end of the last month. What would your equal monthly payments be? \$4,029.37

\$4,241.44

\$4,464.67

\$4,699.66

\$4,947.01

\$4,947.01

Explanation:

In this question, we use the present value formula which is shown in the spreadsheet.

The NPER represents the time period.

Given that,

Future value = \$50,000

Present value = \$250,000

Rate of interest = 6% ÷ 12 months = 0.5 months

NPER = 4 years  × 12 months = 48 months

The formula is shown below:

= PMT(Rate,NPER,PV,-FV,type)

The future value comes in negative

So, after solving this, the answer would be \$4,947.01

Assuming you make an additional final (balloon) payment of \$50,000 at the end of the last month, your monthly payments is:\$4,947.01.

### Monthly payment

Based on the given information we would make use of financial calculator to find the PMT by inputting the below data

PMT(Rate,NPER,PV,-FV,type)

Where:

Future value= \$50,000

Present value= \$250,000

Interest rate= 6%/12 = 0.5%

Nper= 4 years  × 12= 48 months

Hence;

PMT=\$4,947.01

Inconclusion your monthly payments is:\$4,947.01.

Crane uses the periodic inventory system. For the current month, the beginning inventory consisted of 7400 units that cost \$11.00 each. During the month, the company made two purchases: 3100 units at \$12.00 each and 12200 units at \$12.50 each. Crane also sold 12700 units during the month. Using the average cost method, what is the amount of cost of goods sold for the month

\$151,673

Explanation:

Average cost method calculate the cost of the inventory on the average price basis. Cost of goods sold is the cost of the goods sold in the given period.

Description                   Units       Rate                   Value

Beginning Inventory     7,400    \$11.00                 \$81,400

Purchases                     3,100     \$12.00                \$37,200

Purchases                     12,200   \$12.50               \$152,500

Total  Inventory            22,700   \$11.94273128    \$271,100

Sale                               12,700    \$11.94273128    \$151,673

Cost of Goods Sold = \$271,100 x 12,700 / 22,700 = \$151,673

In a perfectly competitive market in the long run, after all adjustments have occurred, an increase in demand causes equilibrium price to: