When evaluating proposals for building a new municipal sewage treatment plant, a benefit-cost analysis
A) does not have to include the cost of the land if it is donated.
B) must include the value of the land even if it is donated.
C) may or may not include the cost of the land if it is donated, depending on whether the donor is a private or public entity.
D) benefit-cost studies are not appropriate for municipal projects.

Question

Quizplus · Accepted Answer

When evaluating proposals for building a new municipal sewage treatment plant, a benefit-cost analysis must include the value of the land even if it is donated. This is because the value of the land represents an opportunity cost for the municipality, meaning that the land could have been used for another purpose that generates benefits for the community. Therefore, it is important to include the value of the land in the analysis to make an accurate assessment of the costs and benefits associated with the project.

When Evaluating Proposals for Building a New Municipal Sewage Treatment