2) Consider the following environmental projects, described as an inter- tempora

Question

2) Consider the following environmental projects, described as an inter- temporal sequence of net benefits, NSB's (+), and net costs, NSC's (-), and evaluate changes in social preference over each of the projects as the discount rate on time, = 1/(1+1), increases. (Note: you can just 'eyeball, this one, you don't need to do any math to answer it, however some explanation is required as to the thought process that led to your answer.) Project A: +200, +200, + 200, -200, -200 Project B: +400, +200, 0,-100, -300 Project C: 0, 0, 0, +100, +500 Project D:-600, +200, +200, +200, +400 Project E: -200, -200, -200, -200, +1400 a) A becomes more preferable relative to C b) D becomes more preferable relative to E c) B becomes more preferable relative to D d) E becomes more preferable relative to B e) A becomes more preferable relative to D

Explanation / Answer

The option (b) is correct that is D becomes more preerable relative to A. Because Net present value of project D is more Compare to net present value of E.

In D it is one time investment at time=0 and lesser amount investment

but in E has higher amount at t=0, t=1, t=2, t=3

Related Questions

Navigate

• Browse (All)
• Browse 2
• Subjects

---

---

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