LESON10B

# LESON10B - Econ 275 - Public Finance - Winter 1994 - 2/8/94...

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Econ 275 - Public Finance - Winter 1994 - 2/8/94 - Lesson #10 - leson10b.275-- Page -- Admin (see results in cost_ben1.wb1--quattro pro worksheet) Cost-Benefit Analysis. (Fall 92 275 lessons 12 & 13, Fall 93 Introduction and overview: Overview Identify timing and amounts of costs and benefits Adjust for time (discount rate) Adjust for inflation Adjust for risk Compute present value for costs and benefits Compute Net Present Value (NPV) Example of time value of money. Present and future values Example of inflation. Real and nominal amounts. Evaluation of risk. Certainty equivalent (appendix). Go over. Computation of present value and NPV Alternatives internal rate of return (IRR). Give rosen example Benefit-Cost ratio. Give Rosen example Other issues appropriate discount rate prices time intangibles Common mistakes secondary benefits and secondary costs The Labor Game-jobs as a benefit Double counting. Rosen example: Increased value of farm land and NPV of future increases in crop yields

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## This note was uploaded on 07/08/2010 for the course ECON 275 taught by Professor Mcintyre during the Winter '05 term at BYU.

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LESON10B - Econ 275 - Public Finance - Winter 1994 - 2/8/94...

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