There is an externality present only when
A) private costs equal social benefits.
B) private benefits equal social benefits.
C) private costs or benefits diverge from social costs or benefits.
D) private costs equal social costs.
Answer: C
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You are given risky cash flow data for a three-year project:
Year Cash flow 1 $2,000 2 3,000 3 4,000 The initial cash outflow is $6,000; the risk-free interest rate is 6%, and the risk-adjusted discount rate is 10%. Calculate the NPV by both the risk-adjusted discount rate method and the certainty equivalent method in such a way that the NPV will be the same using either method.
Using the income approach, general sales taxes, excise taxes, customs duties, business property taxes, and license fees are termed:
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