Assume B is social benefit, C is social cost, r is the social discount rate, t is the time and T is the life of an investment project. The Net Present Value (NPV) of this project is:
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1 mark, −0.33Public EconomicsPublic expenditure and public debtPublic expenditure: growth and cost-benefit analysisEasyabout 1 min
UoH 2021 Question 55: Public expenditure and public debt
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Assume B is social benefit, C is social cost, r is the social discount rate, t is the time and T is the life of an investment project. The Net Present Value (NPV) of this project is: (A) NPV = Σₜ₌₀ᵀ (Bₜ - Cₜ)/((1+r)^t) (B) NPV = Σₜ₌₀ᵀ (Cₜ - Bₜ)/((1+r)^t) (C) NPV = Σₜ₌₀ᵀ ((1+r)^t)/(Bₜ - Cₜ) (D) NPV = Σₜ₌₀ᵀ (Bₜ - Cₜ)/(Cₜ)^t
Public expenditure and public debt has come up 29 times in 6 exams since 2012.
What this question tests
This question is on Public expenditure: growth and cost-benefit analysis, part of Public expenditure and public debt in Public Economics.
Why government spending grows and how projects are appraised.
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