The city of carlsbad in california is considering building a​ $300 million​ water-desalination plant. the facility would be the largest in the western​ hemisphere, producing 50 million gallons of drinking water a day dash enough to supply about​ 100,000 homes. this​ plant, which uses improved membranes and pumping system to bring down the energy cost to​ $1.10 in electricity to produce​ 1,000 gallons of water. suppose the desalination plant is fully operational and you expect to operate it continuously for 20​ years, with an estimated salvage value of​ $20 million. the operating and maintenance costs​ (excluding the energy​ cost) amount to​ $15 million the first year and will increase at a rate of​ 3% each year. if the city plans to sell the water for about​ $950 per​ acre-foot (an​ acre-foot is​ 325,851 gallons dash enough water for four people per​ can it recover the capital cost and all other operating​ costs? assume the​ city's interest rate for this water project is known to be​ 6% compounded annually.

The east asiatic company (eac), a danish company with subsidiaries throughout asia, has been funding its bangkok subsidiary primarily with u.s. dollar debt because of the cost and availability of dollar capital as opposed to thai baht-denominated (b) debt. the treasurer of eac-thailand is considering a 1-year bank loan for $247,000.the current spot rate is b32.03 /$, and the dollar-based interest is 6.78% for the 1-year period. 1-year loans are 12.04% in baht.a. assuming expected inflation rates of 4.3 % and 1.24% in thailand and the united states, respectively, for the coming year, according to purchase power parity, what would the effective cost of funds be in thai baht terms? b. if eac's foreign exchange advisers believe strongly that the thai government wants to push the value of the baht down against the dollar by5% over the coming year (to promote its export competitiveness in dollar markets), what might the effective cost of funds end up being in baht terms? c. if eac could borrow thai baht at 13% per annum, would this be cheaper than either part (a) or part (b) above?