Engineering Economic Analysis

After Completing ThisChapter...

The student should be able to:

· Distinguish the unique objective and viewpoint of public decisions.

·Explain methods for determining the interest rates for evaluatingpublic projects.

· Us.ethe benefit--costratio to analysis projects.

· Distinguish between the conventionaland modified versions of the benefit--costratio.

· Use an incremental benefit--costratio to evaluate a set of mutually exclusive projects.

·Discuss the impact of financing, duration, and politics in public investment analysis.

QUESTIONS TO CONSIDER ~

1.The situation described here is not unique to the Tar...,PamlicoBasin. In fact, it exists

to some degree nationwide. So why has Congress"beenslow.to impose environmental

requirements on the agricultural sector?

2. Manufacturersin the Tar-Pamlico Basin eventuallywere able to work out an agreement
   under which they paid local farmers to reduce pollutant runoff. What was the highest
   amount they were willing to pay per kilogram of pollutants avoided? "


3. What was the lowest amount farmers were willing to accept per kilogram of pollutant
   to sign onto the agreement?