Texas Governor Rick Perry promised to put hundreds of cameras on the Texas-Mexic

Question

Texas Governor Rick Perry promised to put hundreds of cameras on the Texas-Mexico boarder and brodcast the video over the Web so that anyone, anywhere could become a border patroller, helping root out border crime and illegal crossings. As part of that project, Texas secured a fedral grant for $3 million that paid for 200 mobile cameras in strategic high-traffic areas. If the 200 cameras are considered to be equivalent to 20 border patrol agents, each with an annual salary of $75,000, what is the rate of return over a 3-year project period?

Explanation / Answer

Initial investment,I = - $ 3,000,000

annual cash flow,A = 20*75000= $1,500,000

IRR = 23.38% using IRR formula im Excel

Verification:

Net present value= I + A/(1+r)^1 + A/(1+r)^2 + A/(1+r)^3=-217 which is approximately zero

IRR calculation is correct

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.