Question

In a recent benefit-cost analysis of a proposed regulation that generated positive net benefits in the present but negative net benefits in the future, the government used a 5% social discount rate. If it had instead used a 4% social discount rate, the net present value of the policy would have been ______; if it had used a 6% social discount rate, the net present value would have been ______. Select one: a. higher; higher. b. higher; lower. c. lower; higher. d. lower; lower.

Answer 1

Solution- A higher discount Mate leads to a lower net persent value and a lower discount state leads to a higher net present value. Therefore, if the discount rate was 4% then net present value would have been higher and if the discount Glate was 16%, the net present value would have been lower Thus, the coollect answer is Option B - lighed; loween Note: If liked the answer, please give give an up-wote, this will be quite encouraging foame, thank you!