Assignment

Chapter 1 Introduction to Cost-Benefit Analysis

Read Chapter 1 notes (on CANVAS under ‘Files'), and view the class recording for Chapter 1, and then answer the following questions completely. You can use this Word file and type your answers under each question.

1. What is a CBA?

2. Explain the arguments against the use of CBA.

3. What is the purpose of using a CBA?

4. Differentiate the types of CBA (ex-ante, in medias res, ex post, and comparative CBA).

5. List and explain the basic steps in conducting a CBA.

6. a. On the Coquihalla Highway CBA example, what are the two alternatives considered?

b. Whose benefits and costs count (standing)?

c. List down the benefit impact categories and the cost impact categories.

7. Explain how to calculate the NPV (net present value) of an alternative. What is the decision rule for adopting a project?

8. Differentiate and explain the perspectives of a guardian, a spender, and a CBA analyst.

9. What are the consequences of the guardian perspective?

10. Answer Exercise 1.3 (Chapter 1- Exercise 3). A spreadsheet that you can use for Exercise 1.3 is available on CANVAS under ‘Files'. Your county is considering building a public swimming pool. Analysts have estimated the present values of the following effects over the expected useful life of the pool:

                                                             PV (million dollars)
State grant:                                                      2.2
Construction and maintenance costs:                   12.5
Personnel costs:                                                8.2
Revenue from county residents:                          8.6
Revenue from nonresidents:                               2.2
Use value of benefit to county residents:              16.6
Use value benefit to nonresidents:                       3.1
Scrap value:                                                      0.8

The state grant is only available for this purpose. Also, the construction and maintenance will have to be done by an out-of-county-firm.

a. Assuming national-level standing, what are the social net benefits of the project?

b. Assuming county-level standing, what are the social benefits of the project?

c. How would a guardian in the county budget office calculate net benefits?

d. How would a spender in the county recreation department calculate net benefits?

Instructions for submitting an assignment:

All work must be typed using Times New Roman or Calibri, 12 points font, must be double spaced and must be submitted in MS Word; work submitted in any other format will not be graded. Submit your answers using the CANVAS setting for Homework 2. Submission bin will close after the due date and emailed assignments will not be accepted.

Attachment:- Excel-Worksheet.rar