A large electric utility company spews million tons of greenhouse gases (mostly carbon dioxide) into the environment each year. This company has committed to spending $ billion in capital over the next five years to reduce its annual emissions by %. More will be spent after five years to reduce greenhouse gases further. a. What is the implicit cost of a ton of greenhouse gas? b. If the United States produces billion tons of greenhouse gases each year, how much capital must be spent to reduce total emissions by % over the next five years based on your answer in Part (a)?

a. $537.31 per ton

b. $64,477,200,000

Explanation:

a. 5% of 67 million tons will cost $1.8 billion to be reduced.

The implicit cost of a ton therefore is;

= 1,800,000,000 / (5% * 67,000,000)

= 1,800,000,000/ 3,350,000

= $537.31 per ton

b. The amount to be spent to reduce 4 billion tons by 3% is;

= 537.31 * (4,000,000,000 * 3%)

= $64,477,200,000

of the three mortgage options that demarco and tanya have to choose from, the balloon payment mortgage would be their best option, over adjustable payment and fixed payment plans.ultimately, the balloon payment plan would save demarco and tanya overall, in interest, would cost less monthly, and they would only have to make these payments for 8 years, opposing to 30 years for adjustable or fixed payment plans. 

overall, demarco and tanya would save $80,811 if they chose balloon payments over fixed payments, and would save $116,711 if they choose balloon payments over adjustable payments. benefits with choosing fixed payments over adjustable payments is that, in the end, the payments will still be $836.30 a month, while with adjustable payments, the initial monthly payments will be $763.38 to $1082.70 a month, ultimately leading to a more costly purchase. benefits with choosing fixed payments over balloon payments are not present. benefits in choosing adjustable payments over is that it has a lower interest rate, and starts with lower monthly payments initially. benefits in choosing adjustable payments over balloon payments include a lower interest rate, and lower initial monthly payments. benefits in choosing balloon payments over fixed payments include lower interest rates, lower overall price, lower monthly payments, takes less time to pay off, and does not require a downpayment. benefits in choosing balloon payments over adjustable payments include, lower monthly payments (when averaged), takes less time to pay off, and lower overall price.

hence, option c, balloon payments, is the best option for demarco and tanya to make this purchase, for it will save them a minimum of $80811, and a maximum of $116,711.