Consider a project that costs $10,000 today
January 3rd, 2018
Consider a project that costs $10,000 today. It will provide benefits of $4,000 at the end of Year 1, $3,500 at the end of Year 2, and $3,500 at the end of Year 3. If the discount rate is 6 percent, will this project be approved using cost-benefit analysis? Would your answer change if the discount rate is: (a) 5 percent? (b) 4 percent? 5. Consider a hypothetical three-stage screening test for a cancer with the following rates of detection and costs: (a) Calculate the average cost per cancer detected in the three stages. (b) Calculate the marginal cost per cancer detected in the three stages. (c) Suppose that the marginal benefit per treated case is $12,000 per person. What would be the optimal screening, given the costs?
