Figure 1 in Chapter 1 indicates that CBA solves for the present value of net benefits [NPV (B)] by subtracting discounted costs [GPV (C)] from discounted benefits [GPV (B)]. This Appendix, with the assistance of Microsoft Office Excel, is designed as a tutorial in discounting costs and benefits to determine the present value of net benefits.
The net present value (NPV) technique assumes that a dollar presently held by a local community is worth more than a dollar’s worth of benefits received in the future. Consider any positive rate of interest, say 10%. A year from now that dollar would be worth $1.10 in which case more than $1.00 worth of benefits could be purchased. Therefore, any dollars paid or received ...
Get Basic Cost Benefit Analysis for Assessing Local Public Projects now with the O’Reilly learning platform.
O’Reilly members experience books, live events, courses curated by job role, and more from O’Reilly and nearly 200 top publishers.
