For the discount rates of 4% and 7%,
1. Find the formula for and compute the present value (in 2004 dollars) of the cost of the Exxon Valdez spill.
2. Suppose that Exxon could have adopted stricter rules to ensure a rested crew and a sober master at the beginning of 1989. Enforcing these rules would have cost Exxon P dollars every subsequent year in the future, and the crash wouldn't have happened. If Exxon could have estimated the cost of the spill in 1989, how much would they have been willing to pay each year to avoid a crash?

*** YOU DO NOT REQUIRE INFLATION INDEX FOR 2004. THE QUESTION JUST ASKS TO FIND PRESENT VALUE (IN 2004 DOLLAR) USING DISCOUNT RATE OF 4% AND 7%**

Please refer to the excel spreadsheet.
I have put down the cash flows that Exxon has incurred after the accident on the spreadsheet. In column I, I have found the present value of cash flows at the rate of 4% , it is $9,413 million and in column J I have calculated the present value of the cash flows at the rate of 7%, it is $8,052.38 million.

Now, if we take the rate of 4% and the present value figure obtained in column I, Exxon would be ...

Calculating Present and Future Value and Loan Amortizations. ... This solution is comprised of a detailed explanation to calculate present and future value and loan ...

Calculating Present Value of $5,800. ... We can then calculate as follows: = 5,800(0.885) + 6,400(0.783) + 8,700(0.693 ... The solution calculates the present value. ...

Calculating Present and Future Value. ... of this assignment are: i. Determine the present value solutions ...Calculate the future value solutions for period, interest ...

Net Present Value. ... 1.Calculate the NPV for each of the following investments ... PV of cash outflow=-$800,000 For calculating PV of cash inflows, find PV factor from ...

...Calculating for IRR is a trial and error procedure. ... it is easier to use financial calculator to compute IRR ... of a detailed explanation to calculate the present...

... will move into the calculation of calculating the present... is $200,000 * 4% = $8,000 To calculate the present... the interest payment is $8,000 as calculated above ...

... This solution clearly calculates the expected net present value ... Using decision tree analysis, calculate the value of ... i)Use of inflation in calculating cost of ...

... (When calculating DCF on a ... Payback cannot be calculated if the positive cash inflows do not eventually ... FINAL COMMENTS Calculate and compare across companies. ...