What is the social discount rate? Explain why the social
discount rate used in a benefit-cost...
What is the social discount rate? Explain why the social
discount rate used in a benefit-cost analysis can have a large
impact on the study’s conclusions. Discuss your answers
in the context of a carbon tax.
Why is the choice of social discount rate important in
cost-benefit analysis? Critically examine when it
is most appropriate to use the (1) Social Opportunity Cost of
Capital, (2) Social Rate of Time Preference, and (3) Ramsey
approach for discounting in Cost- Benefit Analysis.
Some have argued that in use for Cost-Benefit Analysis, a higher
discount rate is ‘unfair’ to future generations. Explain why this
is not necessarily the case. Give an example to demonstrate.
Considering discount rate of 14%, calculate NPV, Benefit Cost
Ratio, and Present Value Ratio for the following investment and
explain if it is a good investment.
C=10,000
C=8,000
C=6,000
I=7,500
I=7,500
...
I=7,500
L=10,000
0
1
2
3
4
...
10
C: Cost, I:Income, L: Salvage value
Please explain what is Internal rate of return (IRR), Cost of
Capital, NPV, and the Discount Rate.
How are they associated when deciding on an investment
opportunity?
“Social Cost-Benefit Analysis (SCBA) is an assessment method used
to determine the economic prudence of a project, programme, or
policy to all relevant members of society”. Critically examine this
statement.
“Social Cost-Benefit Analysis (SCBA) is an assessment method used
to determine the economic prudence of a project, programme, or
policy to all relevant members of society”. Critically examine this
statement. [50 marks]
“Social Cost-Benefit Analysis (SCBA) is an assessment method
used to determine the economic prudence of a project, programme, or
policy to all relevant members of society”. Critically examine this
statement.