Question: Question Three (8 marks) Explain why the discount rate for the time preference method is different than the discount rate for the social opportunity cost

Question Three (8 marks)

Explain why the discount rate for the time preference method is different than the discount rate for the social opportunity cost of capital. For a public project with a very long time period (say 40 years) and very high initial capital costs, show how the discount rate can have a major impact on the social NPV. (give a numerical example of each method)

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