A local government hazardous waste collection project is proposed for a 3 year experiment trial. Specifics of project: 

 

Nominal discount rate of 3% 

project does not start for two years and lasts for three years 

Project capital cost include first year expense (two years from now) of $40,000 and a 2nd year expense of $5,000 

Operational or variable costs of $1,000 each year of the experiment 

Benefits of the program include: 

Hazardous waste to landfills at $8,000 each year of project 

no illegal dumping of hazardous wastes of $6,000 each year 

Educational experience  of city staff and residents valued at $20,000 at the end of the experimental project 

 

Calculate Net Present Value of project using  3% and 8% discount rate?

What are two costs and two benefits that are to be omitted?

 

Which cost or which benefit will have the greatest amount of uncertainty and why do you think so?