Discount timed public costs and benefits
See this course’s project requirements
A financial appraisal of a fictional community investment with counterfactual, incremental costs, discounted values, distribution and sensitivity.
Keep your working files in your own notebook or software. Save a private description, checklist, and work link in My Proof.
What to include
- A baseline/project comparison with incremental service and scope.
- An incremental resource-cost and transfer-incidence table.
- A dated present-value worksheet with real/nominal consistency.
- A deduplicated benefit inventory with valuation limits.
- A base/low net-value table and distribution note.
- A completed fictional public-spending financial appraisal.
Review and revise
Use these criteria to check your work and choose what to improve.
- All supplied records reconcile and the decision uses the named case rules.
- Calculations show units, intermediate values and a second check.
- Changed-input practice revises the affected result and identifies uncertainty.
- The final project combines six lesson records, separates fictional assumptions from current rules, and states a supported next step.
Want more background?
The idea in everyday life
This is an original fictional practice case. No account, payment, personal record or outside participation is required. Project cost $1,000 today; benefit $1,210 at end of year 2. Fictional real discount rate 10%/year; values are all in today’s purchasing power; no other flows.
Put future amounts into a common base date using one consistent rate and unit basis; a practice discount rate is not official policy.
Discount timed public costs and benefits — worked practice
Put future amounts into a common base date using one consistent rate and unit basis; a practice discount rate is not official policy.
Use paper or a local table; label all amounts as fictional USD unless the case names another unit. Project cost $1,000 today; benefit $1,210 at end of year 2. Fictional real discount rate 10%/year; values are all in today’s purchasing power; no other flows.
Timed real cash-equivalent flows
Paste at A1.
| AFlow | BReal USD today purchasing power | CYear |
|---|---|---|
| Resource cost | -1000 | 0 |
| Benefit | 1210 | 2 |
Copy as plain text
Explicit hypothetical discount assumption
Paste at A5.
| AInput | BValue |
|---|---|
| Real annual discount percent | 10 |
| Current mandatory public rate | Not claimed |
Copy as plain text
1. Step 1: Write the base date and compatible real units
Write the base date and compatible real units.
You should see: Year 0, real dollars, practice 10% real rate.
Put future amounts into a common base date using one consistent rate and unit basis; a practice discount rate is not official policy.
2. Step 2: Calculate year 2 discount factor
Calculate year 2 discount factor.
You should see: 1/(1.1²)=1/1.21.
Keep this intermediate result so the final decision can be checked.
3. Step 3: Calculate present benefit
Calculate present benefit.
You should see: 1210/1.21=$1,000.
Keep this intermediate result so the final decision can be checked.
4. Step 4: Subtract present cost
Subtract present cost.
You should see: Net present value $0 in this limited scenario; no agency-required rate is implied.
Keep this intermediate result so the final decision can be checked.
What to finish
A dated present-value worksheet with real/nominal consistency.
Watch for this
Calling the exercise’s10% rate an official grant or agency requirement.
How can I tell I understand it?
Calculate a discounted public-benefit present value under an explicit fictional rate on the supplied changed case while preserving the stated rule and checking the final record.
Quick knowledge check
Answer all 3 questions. Get at least 2 right and the lesson completes automatically.
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Answer all 3 questions above and get at least 2 right. You can review the explanations and try again.
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Sources and further reading
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Source & access notes · checked 2026-10-01
Official page opened/read during Money expansion authoring; checked the relevant concept and access state. These sources do not establish funding eligibility.
Access: Readable official webpage inspected with the web reader on 2026-10-01. No interactive-tool operation is claimed.
Reuse: Original fictional practice, questions and calculations; paraphrased concepts with a source link. No source exercise copied.
Source & access notes · checked 2026-10-01
Official page opened/read during Money expansion authoring; checked the relevant concept and access state. These sources do not establish funding eligibility.
Access: Readable archived EPA Chapter 6 PDF inspected for the present-value method only; this is not current required discount-rate guidance.
Reuse: Original fictional practice, questions and calculations; paraphrased concepts with a source link. No source exercise copied.
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