1. Business
  2. Economics
  3. consider a highway project with the following costs and benefits...

Question: consider a highway project with the following costs and benefits...

Question details

Consider a highway project with the following costs and benefits. This representation of costs and benefits assumes the costs occur immediately and the benefits occur at the end of year 1, end of year 2 and the end of year 3.

Year

0

1

2

3

Costs

$470,000

Benefits

$275,000

$295,000

$315,000

(a) Calculate the net present value of the project. Assume a discount rate of 4%.

(b) Now suppose all the benefits occur at the start of each period. What happens to your net present value calculation?

Solution by an expert tutor
Blurred Solution
This question has been solved
Subscribe to see this solution