The textbook discusses at some length the difference between private and public project appraisal methods; that is,
Question:
The textbook discusses at some length the difference between private and public project appraisal methods; that is, capital budgeting and cost-benefit analysis, respectively, Both of these project-appraisal methods use the net present value formula. However they differ in some significant ways in how the following three issues are addressed (1) the estimation of benefits; (2) the estimation of costs; and (3) the choice of discount rate. With this in mind and based on the materials covered in Section 8. 3, make sure you have a good understanding of the following key concepts: social benefit versus private benefit; social cost versus private cost; the problem of double-counting costs; the real effect versus the inflationary (secondary) effect of price changes; and private versus social discount rate.
Step by Step Answer:
Principles Of Environmental Economics And Sustainability
ISBN: 9780815363545
4th Edition
Authors: Ahmed Hussen