Asked by Emily Gellis on May 01, 2024
Verified
Which of the following factors influence the appropriate value for the social rate of discount used in NPV analysis of stock externalities?
A) Expected rate of economic growth
B) Extent of social risk aversion
C) The society's rate of time preference
D) all of the above
Social Rate
Often refers to the rate of return on a public investment or project that includes both the private and external benefits to society.
NPV Analysis
A method of calculating the present value of an investment's expected cash flows minus the initial investment cost to assess profitability.
Externalities
The unintended positive or negative consequences of an economic activity on unrelated third parties.
- Understand the concept of social discount rate and its application in policy evaluation.
Verified Answer
Learning Objectives
- Understand the concept of social discount rate and its application in policy evaluation.
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