Assume you work in the US Fish and Wildlife Service, an agency within the US government's Department
Question:
Assume you work in the US Fish and Wildlife Service, an agency within the US government\'s Department of Interior. You have been tasked with examining a proposal to develop a new wildlife refuge being proposed in the Gulf of Mexico region. You must decide whether moving ahead with this proposed project is in the best interests of citizens. As a federal agency, the Fish and Wildlife Service (UWFWS) is national in its orientation and constituency.
In evaluating the proposed refuge project, you have been asked to use both the net present value (NPV) and benefit-cost ratio (B/C) criteria. This project is the only one being considered at the present time and you must decide whether to recommend acceptance or rejection. The national economy is assumed to be operating at full employment and full capacity. The benefits and costs, as estimated by university researchers within the region, are presented below and the USFWS has accepted them as being reliable.
| Category | Present Value (milllions of dollars) |
|---|---|
| Total Implementation and Construction Costs (road access, visitor center, etc.) | $71 |
| Local area share of Construction Costs | $18 |
| Additional local business income indirectly attributable to the project (e.g., project employees using their salaries to purchase groceries or pay their housing rent) | $96 |
| Positive impacts upon wildlife diversity and regional flood protection | $94 |
| Net income from newly created recreation opportunities | $122 |
| With Project (if implemented): agricultural and industrial production, after subtraction of production costs | $6 |
| Refuge operation and maintenance costs | $24 |
| Loss of nonnative species that are important to some natural system observers but displaced in creation of the refuge (replaced due to implementation of the project) | $22 |
| Without Project (current situation without project): agricultural and industrial production, after subtraction of production costs | $85 |
| Net loss of income from recreation opportunities displaced in construction of the project (replaced due to implementation of the project) | $13 |
| Additional local business costs indirectly attributable to the project (e.g., employees losing jobs due to the new project will no longer purchase groceries or pay rent in the local area when they relocated to other regions of the country) | $21 |
Given the data presented above, what is the benefit-cost ratio for this project? (express you answer rounding to 2 decimal places, e.g., 1.5482 would be 1.55)
A correct answer will have omitted 3 items from the data table. If you have omitted the correct 3, then it is a matter of manipulating the remaining values in the correct manner to obtain the right B/C for this project. If done correctly, you will only have one number in the denominator for this benefit-cost ratio.
Also, remember, anything that is a legitimate cost or benefit in calculating the NPV is also legitimate for calculating the project\'s benefit-cost ratio.
\r\n
Expert Answer:
COST 1Total Construction and Implementation Costs road access visitor center etc 71 Total cost 71 18 ... View the full answer
