Cost and Benefits Analysis

In class, we discussed several alternative social discount rate candidates, including the before tax rate of return on investment (r). To select r as the appropriate social discount rate to use in evaluating public sector investment projects, would one need to assume that the government obtains its project funds from taxes or from borrowing or from some combination of the two? Would one need to assume that the project funds displace private sector investment or consumption or some combination of the two? Please explain. Contrast using r as the discount rate and discounting in the conventional manner with using the shadow price of capital approach. Specifically, why might the former be more practical, but the latter theoretically superior