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You are analyzing a proposed project to renovate a local public recreation center. The project will cost $500,000 up front. It is expected that the
You are analyzing a proposed project to renovate a local public recreation center. The project will cost $500,000 up front. It is expected that the value of the benefit to the community will be $35,000 (in nominal $) per year for 20 years. You and your team are unsure what discount rate would best proxy for the county residents time preferences and are unsure what future inflation will be. You have decided to test the sensitivity of the results to using the CBOs recommended discount rate (2%) and the OMBs recommended discount rate (7%). In addition, youve decided that expected inflation should fall somewhere between 2% and 5% annually. Perform a best and worst case sensitivity analysis. Based on this analysis do you think the county should move forward with this project
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