When governments study potential infrastructure projects, they frequently consider the salvage value of the project at the end of its useful life. For example, a bridge that is about to replaced may have components like metal or concrete that can be sold or used in other projects. This value is known as the horizon value.

A potential mining project under review has a horizon value of $30 million in 25 years. Should that be part of the decision-making process regarding whether or not to start the project? How would researchers incorporate the information into the present analysis? The discount rate is 3%. If the jurisdiction decides to go ahead with the project, how should they account for the horizon value of the mine?