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A foreign firm is considering a project which has, benefits of $200 and a present value of input costs of $130. If the project goes
A foreign firm is considering a project which has, benefits of $200 and a present value of input costs of $130. If the project goes ahead, with a present value of $50 will be paid to the host country, domestic labour which would otherwise be unemployed will be paid wages with a present value of $50 for working on the project (the wage bill is included in the input costs referred to above), and pollution caused by the project will reduce the value of output elsewhere in the host country's economy by $10. Assuming that the owners of the foreign firm are not part of the referent group, and that the opportunity cost of unemployed labour is 50% of the market wage, what are the net present values generated by: (i) the project benefit-cost analysis; (ii) the private benefit-cost analysis; (ii) the efficiency benefit-cost analysis; (iv) the referent group benefit-cost analysis? at market prices, a present value of 3. tax
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