1. The following table gives the time lines of costs and benefits for two different projects.

Project A

Project B

Time period	Benefits	Costs	Benefits	Costs
0	225	0	0	300
1	200	0	200	0
2	150	0	150	0
3	0	400	150	0

a. Suppose that the rate of interest is 3%. Which one is the most preferred according the the standard CBA rule? Show all your calculations.

b. Repeat the analysis of part (a) for a rate of interest equal to 1%.

c. Provide an economic explanation for any similarities or differences you find in the preferred outcomes in parts (a) and (b).

Answer rating: 100% (QA)

Answer Lets calculate the Net Present Value NPV for both projects A and B at 3 and 1 inte... View the full answer