A business improvement district is considering the installation of a new light- ing system for the...

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Finance

A business improvement district is considering the installationof a new light- ing system for the district. If the lighting systemis installed, all the businesses in the area will benefit, andthere will be no way in which a business that does not pay for ashare of the system can be denied full benefits from the system.The system will cost $4,000 and will benefit the five members ofthe district as follows: Individual Benefit (in $) A 1,500 B 1,500C 700 D 600 E 600 Cost Share (in $) 800 800 800 800 800 a. Is theproject economically feasible? b. Would any individual business bewilling to install the lighting system (and pay for it) by itself?c. Would the project be approved by a majority of the businesses ata referendum? d. Does the project as currently structured meet thePareto criterion? e. If possible, revise the cost shares to allowthe project to meet the Pareto crite- rion and to pass areferendum.

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4.3 Ratings (552 Votes)

Answer a Economical feasibility of project Total benefit to all parties Total cost 4900 4000 900 Answer b No as none of the business house has benefit more than 4000 See Answer

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