Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. the santa clara river in californias ventura count

The Santa Clara River in Californias Ventura County floods frequently, in part because the banks...

70.2K

Verified Solution

Question

Accounting

The Santa Clara River in Californias Ventura County floods frequently, in part because the banks of the river lack water absorbing vegetation. Because of this flooding, the 1,000 homeowners with houses near the river must buy high-risk flood insurance. The flood insurance costs each of these homeowners $150 per year.

The County is considering implementing a new flood control plan. The plan would involve planting trees and other vegetation around the river to create natural flood control. Creating this natural flood control buffer would cost each of the 1,000 homeowners a fee of $150, to be paid immediately. The flood control benefits wont begin until one year has passed. After one year has passed, each property owner will begin to save $20 per year on their annual flood insurance premiums. The $20 savings per year will last forever.

Consider the present discounted value of the costs and benefits of this program to homeowners. Will homeowners approve of this project if the interest rate on investments is 10%? 5%? Show all of your work for full credit.

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students