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year, starting from year three. Each project is assumed to have zero salvage value at the end of its life. Using a real discount
year, starting from year three. Each project is assumed to have zero salvage value at the end of its life. Using a real discount rate of 5 percent, which project should be recommended? Question 5 (20 marks) The government of country X is considering a highway project which would connect the two provinces of this country. It asked your company to provide a cost-benefit analysis of the proposal. If the project is approved, the construction will begin in January 2021 (time 0 in your analysis). The life of this highway is 20 years. All the monetary values given below are in real values in January 2021 prices. The costs for doing research about the feasibility of the project were $1 million in January 2019 and $2 million in January 2020
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