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Studies have shown that placing trained nutrition monitors in local clinics leads to lower child malnutrition rates in your country. Studies also show that improved
Studies have shown that placing trained nutrition monitors in local clinics leads to lower child malnutrition rates in your country. Studies also show that improved school feeding programs leads to lower child malnutrition in your country. Two proposals are on your desk, each designed to reduce the child malnutrition rate in your country by 1% per year. You only have enough operating funds to do one, and you can't combine them - it is pick one or the other. Placement of nutrition monitors: This is a three year program (start up recruitment and hiring is year zero, year one the monitors are in place working, year two the monitors are in place working, then the project phase ends) to hire and place in local clinics the nutrition monitors. It will cost 2.3 million in the current start up year to hire and place these monitors, and will cost 1 million per year for each of two years of program implementation to pay the salaries of these local nutrition monitors. School feeding: This is also a three-year program (start up and organization in year zero, then feeding in the following two years t=1 and t=2, then the project phase ends) to provide food to children in primary schools. T=0 costs 1.6 million, and the operating costs per year are 1.4 million for the following two years. a. Which program achieves the targeted reduction of the child malnutrition rate at the lowest present value cost if the discount rate is 10%? b. Which program achieves the targeted reduction of the child malnutrition rate at the lowest present value cost if the discount rate is 5%? c. Contrast your answer to (a) and (b) by describing how future expenses are impacted by a relatively lower discount rate, and the pattern of cost flows for the two policies
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