Present Value Of Benefits Research Articles

Price Identification And Financial Feasibility Study of Hydroponic Agriculture Iot Solution Launch Project at PT XYZ

Since 2015, the Internet of Things technology has grown significantly, reaching over 400 million users by 2022 in Indonesia. Recognizing the potential, PT XYZ, an innovative Indonesian telecommunications company, intends to launch an IoT solution for hydroponic agriculture. The launch project requires an initial investment of around Rp 500 million. Given that amount, PT XYZ aims to determine the selling price using a value-based pricing strategy and assess the project's financial feasibility and risks before proceeding. Primary and secondary data will be utilized in this research to determine the customer's willingness to pay (WTP), Capital budgeting cash flow, which includes the hypothetical price of IoT, calculating the weighted average cost of capital (WACC), free cash flow to the firm (FCFF), and terminal value. The study used various capital budgeting techniques, such as net present value (NPV), profitability index, payback period, internal rate of return (IRR), and Excel's goal seek feature, to determine the IoT solution's pricing. A risk analysis using sensitivity and Monte Carlo simulations have conducted. The research finds that the present value of benefits, or WTP, for the IoT solution, is Rp 90,708,238. Considering PT XYZ's targeted internal rate of return of 20%, the determined selling price is Rp 20,120,408, which lies within the customer's WTP, making the project feasible. Capital budgeting techniques show a payback period of 4.08 years, an NPV of Rp 3,424,935,505, and a profitability index of 8.21 over five years, indicating positive outcomes. However, the sensitivity analysis reveals that a change in product price, cost of goods sold, and salary expenses will significantly impact the NPV, resulting in a 12.69% risk, with profitability remaining high at 87.31%. In conclusion, PT XYZ's hydroponic agriculture IoT solution launch project is considered feasible, considering potential risks and mitigation strategies.

Application of Data-Driven Safety Analysis to Support Port Authority Investment Decisions for Converting Conventional Toll Plazas to Open-Road Tolling

Capital improvement projects have the potential to enhance safety, mobility, and environmental quality, but these projects can include considerable costs. When making investment decisions, it is important for agencies to understand the costs in relation to the potential benefits. For several years, transportation agencies have analyzed and quantified the operational and environmental impacts of proposed projects. More recently, the first edition of the Highway Safety Manual and related resources have provided agencies with the tools needed to quantify the safety impacts of proposed projects. This paper describes the use of data-driven safety analysis methods by the Port Authority of New York and New Jersey to quantify the direct and indirect safety benefits of the proposed conversion of conventional toll plazas to open-road tolling. The analysis estimated the direct safety benefits (i.e., change in the number of crashes) and indirect safety benefits (i.e., change in travel time, fuel costs, and emissions resulting from crashes). These changes were converted to dollars, providing an estimate of the present value benefits based on the expected service life of the enhanced toll systems. The analysis indicated the conversions could reduce crashes by more than 900 annually, including the prevention of nearly 30 injury crashes annually. Indirect safety benefits included more than 200,000 h in reduced travel time, 335,000 gal of fuel saved, and nearly 3,000 metric tons of CO2 reduced annually. Over the 15-year life cycle, this would provide an estimated benefit of more than $200 million from crashes directly and $367 million in indirect benefits.

Determination of Financial Rotation of Acacia nilotica (L.) Plantations: A Case Study in Faridpur District of Bangladesh

Knowing the rotation age of farming trees is important to urge maximum return from it. Acacia nilotica (Babla) may be a widely planted farming tree especially in modern agroforestry practice mainly in northern, north western and south western region of Bangladesh. Farmers have little idea about optimum age of the trees to be cut. So, they fail to realize maximum enjoy it. No study has been undertaken to work out the optimum rotation age for A. nilotica in Bangladesh. during this study, an effort has been taken to unravel this problem. Plantations done by Bangladesh Forest Department (BFD) in Faridpur district has taken into consideration as study area. Total cost and total benefit for every plantation site was identified first. Then, Present Value of Benefit (PVB), Present Value of Cost (PVC) and Net Present Value of Benefit (NPVB) were determined to live the Land Expectation Value (Le), Internal Rate of Return (IRR) and Benefit-Cost Ratio (B/C). Using those parameters during this study, it's found that 11 to 14 years old plantations provided highest benefit to the farmers and this could be the acceptable rotation age for Babla trees in Faridpur district. Keywords: Babla, Financial rotation, Forest Management, Faridpur, Bangladesh. DOI: 10.7176/JESD/12-4-05 Publication date: February 28 th 2021

An Evaluation of the Economic and Resilience Benefits of a Microgrid in Northampton, Massachusetts

Recent developments and advances in distributed energy resource (DER) technologies make them valuable assets in microgrids. This paper presents an innovative evaluation framework for microgrid assets to capture economic benefits from various grid and behind-the-meter services in grid-connecting mode and resilience benefits in islanding mode. In particular, a linear programming formulation is used to model different services and DER operational constraints to determine the optimal DER dispatch to maximize economic benefits. For the resiliency analysis, a stochastic evaluation procedure is proposed to explicitly quantify the microgrid survivability against a random outage, considering uncertainties associated with photovoltaic (PV) generation, system load, and distributed generator failures. Optimal coordination strategies are developed to minimize unserved energy and improve system survivability, considering different levels of system connectedness. The proposed framework has been applied to evaluate a proposed microgrid in Northampton, Massachusetts that would link the Northampton Department of Public Works, Cooley Dickenson Hospital, and Smith Vocational Area High School. The findings of this analysis indicate that over a 20-year economic life, a 441 kW/441 kWh battery energy storage system, and 386 kW PV solar array can generate $2.5 million in present value benefits, yielding a 1.16 return on investment ratio. Results of this study also show that forming a microgrid generally improves system survivability, but the resilience performance of individual facilities varies depending on power-sharing strategies.

Optimization of thermal systems considering time-varying availability: a case study of the CGAM problem

One of the most important steps of the thermal systems design process can be economic optimization. In the conventional methods of this optimization, most of the time system’s availability, amount of production, and maintenance costs are considered to be constant throughout the system’s lifetime. However, factors such as changing of the components’ failure rate due to degradation or repairing, and stops in operation because of overhauls could lead to a change in the availability and the amount of production. Also, in multi-product systems, upstream components’ failures would stop production in downstream parts. In this paper, a method is proposed regarding the consideration of these factors to economic optimization. Hence, the optimal system design and its economic analysis would be more accurate than conventional methods. In terms of a case study, the CGAM cogeneration system is studied. The first step of this optimization is calculating instantaneous availability employing the state-space method by considering the overhauls and time-varying failure rate for the components. Then, the average availabilities for power and heat generation in each year are estimated. As costs and incomes appear to be variables, the net present value of benefits is considered as an objective function and the optimum system properties are achieved through solving the optimization problem.

The effect of informational prompts about survivor benefits for spouses on Social Security claim intentions

AbstractMarried men's Social Security claiming behavior does not always take into account spouse and survivor benefits. Specifically, married men tend to choose claiming ages that do not maximize the household's and widow's expected present value of benefits. To understand what contributes to this pattern, we conduct an online survey experiment with a representative sample of Americans. We randomly assign respondents to one of four vignettes that present information about a character who is choosing when to claim his retirement benefits. The vignettes differ by whether the character is married or not, whether information about survivor benefits is presented, and whether the information includes an illustrative example. We next ask respondents to provide advice to the character about when to claim. We find that (1) respondents do value survivor benefits for spouses, and (2) information about survivor benefits tends to increase the suggested claiming ages only among the subgroup of respondents who are the least knowledgeable about these benefits.

Selecting a Social Security Age to Balance Consumption and Risk

This paper uses Monte Carlo simulation to determine the maximum consumption given retirement at age 62, initial wealth, risk tolerance, and Social Security take decision. Coile et al. (2002) argue for a delay, because the payment increases 7% for each year. Focusing on maximizing the expected present value of benefits may be misguided. This paper shows that, conditional on retirement at age 62, initial consumption is always maximized by taking Social Security no later than age 63; it also results in the highest simulated ending wealth at death, and the lowest amount of simulated time living on just Social Security.

Wind capacity growth in the Northwest United States: Cooptimized versus sequential generation and transmission planning

This article demonstrates the benefits of simultaneous cooptimization on a 312-bus network representation of the Western Interconnection power grid with emphasis on The Bonneville Power Administration’s operational area in the Pacific Northwest. While generation and transmission expansion planning has traditionally been solved sequentially, simultaneous cooptimization of both guarantees plans at least as cost effective as sequential approaches and better integrates high-quality remote resources like wind into power grids. For three scenarios with varied carbon and transmission costs, results indicate that (1) simultaneous cooptimization provides up to 6 billion dollars in net present value benefits over sequential optimization during the 50-year planning horizon, (2) cooptimization is more adept at tapping into superior remote resources like wind that the sequential approach has trouble identifying for low iterations, and (3) 10 iterations of sequential cooptimization only capture 75%–96% of the transmission benefits of simultaneous cooptimization.

Individual Financial Returns from Quebec Pension Plan Reform Options: Analyzing Proposals to Renew a Second-Pillar Retirement Income Program

We use simulation methods and a detailed tax calculator to analyze the likely effects of two recent proposals aimed at reforming the Quebec Pension Plan (QPP): the federal proposal, eventually implemented throughout Canada, and the Quebec government's December 2016 proposal. Accounting for education-adjusted life expectancy, earnings variability over the course of a career, and their interactions with the tax code and retirement income system, we find that internal rates of return (IRRs) for new QPP contributions are similar under both reforms for individuals with lifetime average annual earnings of more than $40,000. Both reforms yield substantial IRRs for low-income individuals. Although the Quebec proposal offers higher IRRs for individuals earning less than $40,000, the federal proposal yields greater present value benefits for these same individuals. We show that if new QPP benefits were exempted from the Guaranteed Income Supplement (GIS) clawback, and provided that the working income tax benefit and GIS were not enhanced, the two reforms would yield similar IRRs for individuals with average earnings of more than $15,000. The QPP reform would thus better focus on the middle-income earners originally targeted by reform advocates.

Vehicle crowding vs. consumer surplus: A case study at Wasgomuwa National Park in Sri Lanka applying HTCM approach

This study investigates how ‘vehicle crowding’ affects consumer surplus (CS) at the Wasgomuwa National Park (WNP) in Sri Lanka. The new recreational scenario that the study developed estimated the CS at Sri Lanka Rupees (SLR) 11,582.10 per visitor, which was 98 times higher than the present CS and a 96.96% increase on the present value of benefits. In the proposed recreational scenario, the crowding effect was estimated by applying the hypothetical travel cost method while the changes in CS values were studied under six different ‘vehicle crowding’ levels. The findings also indicate that visitor satisfaction in terms of CS decreases with crowding. The results of the present study would be of use to park management with regard to decision-making relating to (a) revisions in the park entrance fee; (b) diversification of tourist activities within the Park for the purpose of enhancing visitor satisfaction; and (c) vehicle crowding management.

Evaluating the Talent Search TRIO program: A Benefit-Cost Analysis and Cost-Effectiveness Analysis

Talent Search was created to improve high school completion and college enrollment for disadvantaged students. Since the program’s inception in 1967, there has not been a valid study on its economic value. In this paper, we perform a full economic evaluation, yielding direct information on the value of Talent Search and highlighting key methodological issues relating to economic evaluations of education programs. We provide rigorous estimates of social costs using the ingredients method. Using prior estimates of impacts from Constantine et al. [(2006). Study Of The Effect of The Talent Search Program On Secondary And Postsecondary Outcomes In Florida, Indiana And Texas: Final Report From Phase II of The National Evaluation. Washington, DC: U.S. Department of Education Office of Planning, Evaluation and Policy Development, Policy and Program Studies Service], we perform a cost-benefit analysis based on new estimates of shadow prices. Finally, to examine site-specific differences in impacts and costs, we undertake cost-effectiveness analysis and derive confidence intervals that illustrate key sensitivity issues. Regarding costs, we find significant resource use beyond federal funding amounts; but we also find that the present value benefits of Talent Search almost certainly exceed the present value of costs by a substantial margin. With regard to cost-effectiveness, we find significant differences across sites and extremely wide confidence intervals. We conclude with an outline of key research issues that need to be addressed to enhance future economic evaluations in educational settings with wide site-specific variation.

Capital Expenditures, Depreciation, and Amortization in the Gordon Growth Model

This article discusses two common errors when calculating terminal value using the Gordon growth model—overstating depreciation in relation to capital expenditures and overlooking amortization's time limits. For a growing company, normalized capital expenditures must be materially higher than depreciation. Amortization of intangible assets is worth the present value of the future tax benefits and should be excluded from the base on which terminal value is calculated. Instead, the present value of the benefits should be added to enterprise value. Similar adjustments should be made for tax-loss carryforwards, limited-life royalties, and other limited-life income and expenses.

Commodity Prices and the Option Value of Storage

Commodities are physical, not financial, assets. We investigate the effects on equilibrium spot-price behavior of frictions in the storage process, which introduce an element of irreversibility to storage decisions and lead to periods when storage operators do not trade in the spot market. We value the real option to delay selling a stored commodity, which comes bundled with the stored commodity itself and generates a convenience yield. The latter arises if the spot price is incorrectly used to measure the market value of the stored commodity, ignoring the embedded real option. It can be interpreted as the expected excess return on the real option to delay selling the stored commodity. Rather than equalling a flow of benefits received during the period over which the return from storage is being calculated, it actually represents changes in the present value of benefits that will be received only some time after the measurement period, when the commodity is released from storage. Storage frictions also generate heteroskedastic spot prices, with volatility being much higher when storage operators decide not to trade in the spot market.

Cost–benefit analysis of Atlantic salmon smolt releases in relation to life-history variation

Cost–benefit analysis was applied to estimate the net present value (NPV) of Atlantic salmon (Salmo salar, Carl Linnaeus) hatchery smolt releases and the spatial distribution of the present value of benefit [PV(B)] in the Baltic Sea. The benefit was assessed for the commercial fishery and separately from hatchery-reared and wild smolts. Data on Carlin tagging and on the proportions of individual salmon stocks in the commercial catches were used. The NPV of hatchery smolt releases appeared to be negative with current rearing costs and the range of applied discount rates (2–4%), and especially with the currently low overall survival of salmon smolts in the sea (<2%). A 5% recapture rate had been needed for a positive outcome. The PV(B) of wild salmon smolts was higher than that of reared salmon smolts due to their larger catch size and higher recapture rate. Both wild and reared salmon mostly benefited the fishermen operating in the Baltic Main Basin, while few fish and minor revenues were left for the coastal and river fisheries in the Bothnian Bay. Six salmon stocks, three wild and three reared, originating from the Bothnian Bay accounted for 60% of the total Atlantic salmon catch in the Baltic Sea. The current economical benefits from hatchery smolt releases to professional fishermen barely overcome the costs they cause to rearing and releasing counterparties.

Cost-benefit analysis of riparian protection in an eastern Canadian watershed

Forested riparian buffers have proved to be an effective management practice that helps maintain ecological goods and services in watersheds. In this study, we assessed the non-market benefits and opportunity costs associated with implementing these buffers in an eastern Canadian watershed using contingent valuation and wood supply modeling methods, respectively. A number of buffer scenarios were considered, including 30 and 60 m buffers on woodlots and on all land (including woodlots, agricultural, and residential lands) in the watershed. Household annual WTP estimates ranged from −$6.80 to $42.85, and total present value benefits ranged from −$11.7 to $121.7 million (CDN 2007), depending on the buffer scenario, affected population, time horizon, and econometric modeling assumptions considered. Opportunity cost estimates range from $1.3 to $10.4 million in present value terms, depending on silvicultural and agriculture land rental rate assumptions. Overall, we found that the net present value of riparian buffers was positive for the majority of scenarios and assumptions. Some exceptions were found under more conservative benefit, and higher unit cost, assumptions. These results provide decision makers with data on stated benefits and opportunity costs of riparian buffers, as well as insight into the importance of modeling assumptions when using this framework of analysis.

Watershed development project justification by economic evaluation: a case study of Kachhighati Watershed in Aurangabad District, Maharashtra

It is essential to study the economical impact of watershed development project on the people in a watershed for its justification based on the huge investments made in it by various government and non-government organisations (NGOs). In the present study, the economical impact of the Kachhighati Watershed development project executed during 1996–2000 is analysed using tools like cost–benefit analysis (CBA), present value (PV) and sensitivity analysis. Kachhighati Watershed is one of the micro watersheds of the Godavari Basin located in Aurangabad District of Maharashtra State, India. The watershed development project was implemented by an NGO named Dilasa Janvikas Pradhikaran. The benefit–cost (BC) ratio of the Kachhighati Watershed development project estimated based on the total present value of costs (TPVC) and the total present value of benefits (TPVB) is calculated as 7.1658, which is more than 1. Hence it is ascertain that the project is cost beneficial. Also the average annual BC ratio of the Kachhighati Watershed development project based on PVs during the first 5-year block period (1997–2001) is 3.1397, whereas that in the second 5-year block period (2002–2006) after the implementation of project is 5.2870, which also ascertains the economic appraisal of the people living in the watershed. In the present paper, the BC ratio of the entire project life, 5-year block period and individual year is estimated based on the PVs and followed by sensitivity analysis. This type of economic analysis on various time scales is absent in earlier work, and this is the new contribution by the present paper. The results of the study show usefulness of the watershed development project for appraisal of the economic status of the people in the watershed. Economic evaluation as a tool is found effective for the financial validation of watershed projects.

Life cycle cost assessment of a rain water harvesting system for toilet flushing

Rain water harvesting (RWH) has gained popularity as a way of supplementing water supplies for various purposes, including drinking, sanitation and irrigation. This paper presents a methodology of life cycle cost assessment (LCCA) of a unit RWH system (hereafter RWH system) for toilet flushing in an industrial site. The life cycle cost and net present value benefits (NPVB) were estimated for the RWH system and compared with those of a conventional system. For the current system design, the analysis of the life cycle cost of the RWH system indicates negative NPVB for all plausible service lives up to 55 years, mainly because of the initial infrastructure investment costs, operation and maintenance (O&amp;M) costs, and pumping costs for the system. However, sensitivity analysis concluded that an alternative design with no pump, low O&amp;M costs (5%) and 1% tank refill volume may be economically viable given 7 years of service life. The sensitivity analysis also revealed that higher hypothetical water prices ($5/m3) may lead to positive NPVB after only 5 years of service. Full cost pricing for rainwater harvesting is important for the promotion of sustainable practices and life cycle based system design is critical to make RWH systems economically attractive.

Park-and-Ride Facilities in New York City

A procedure is developed to assess the economic feasibility of park-and-ride facilities. Relevant literature is discussed, and a mathematical formulation that can be integrated with a regional planning model is produced and applied to the selection of park-and-ride facilities in New York City. The evaluation procedure is divided into two main stages: candidate selection and candidate evaluation. The candidates are selected according to a set of criteria that includes demand considerations, transit connectivity and design, community integration, and economic viability. Economic assessment of the candidates considers the generalized cost of travel and entails the use of a binary logit model and the computation of four performance measures: expected demand, market share, weighted average savings, and present value of benefits.

Cost Structure and Efficiency of Korea’s Road and Rail in the Manufacturing Industries

This paper analyzes the contribution of public infrastructure to private sector. It takes the example of road and rail and investigates their impact on South Korean manufacturing industries. To assess the cost structure and efficiency of investments in infrastructure, economies of scale, effects of infrastructure on variable cost and output, investment condition for infrastructure, and substitution and price elasticities are calculated. The divergence of infrastructure stocks from their static equilibrium levels influences production efficiency. Overall, investments in road and rail have positive effects on the manufacturing industries in Korea. This study expands the scope of existing studies by decomposing the internal rate of return (IRR) and the present value of benefit (BPV) into variable cost reduction, investment cost reduction, and rent. It was found that BPV checks only the magnitude of benefit, whereas IRR indicates the existence of efficiency by investigating total cost reduction and rent. Finally, by analyzing investment efficiency and changing benefit with respect to road and rail through the investment efficiency methodology that compares IRR with market interest rate, retrospective benefit-cost analysis is conducted.

Rentabilité des plantations d’épinette blanche améliorée génétiquement au Québec : le point vue du propriétaire

One of the main issues facing the forest sector at present relates to striking a balance between the increasing demand for wood fibre and the need to maintain the sustainability of forest ecosystems. New approaches are needed to ensure more effective management of ecosystems and to implement intensive silviculture where possible to increase timber yields. To achieve this shift, we need to determine the economic potential of the various options available, including the use of biotechnology. This study was undertaken to estimate the benefits produced by genetically improved white spruce plantations, to determine the optimal economic rotation age for such plantations, and to evaluate the effect of certain factors such as the quality of reforestation sites, potential genetic gains from the use of biotechnology, and silvicultural regimes. Genetic gains are estimated in relation to 3 production approaches: 1) planting of seedlings obtained from seed orchards (10% height gain), 2) planting of multifamily varieties using cuttings from superior families obtained from controlled crosses (15% height gain) and 3) planting of multiclonal varieties produced through somatic embryogenesis and selected from seed orchards using genetic markers (20% height gain). The latter approach is still under development but is considered realistic. The present value of benefits (PVB) and the equivalent annual cash flow (EACF) criteria were used to estimate the benefits resulting from these genetically improved plantations and to determine the optimal economic rotation age. The analyses showed that the forest site quality has the greatest influence, followed by the factors representing productivity gains associated with genetic gain, and the silvicultural regime. Genetically improved stock can generate increases in PVB of up to 73% depending on the approach used to exploit the potential genetic gains. The results suggest that, to maximize profitability, improved stock should be used on the most productive sites and the plantations should be intensively managed. Key words: economic benefits, white spruce, genetic improvement, intensive silviculture, multiclonal varieties, optimal economic rotation age