In calculating the benefit-cost ratio,social benefits and costs are discounted at the
A) internal rate of return
B) federal funds rate
C) Treasury Bill rate
D) long-term government bond rate
E) none of the above

Question

Quizplus · Accepted Answer

In calculating the benefit-cost ratio, social benefits and costs are typically discounted at a rate that reflects the opportunity cost of capital or a social discount rate, rather than any specific financial rate like the internal rate of return, federal funds rate, Treasury Bill rate, or long-term government bond rate. The correct discount rate to use can vary depending on the guidelines of the organization or government conducting the analysis, but it is not specifically any of the rates listed in options A through D.

In Calculating the Benefit-Cost Ratio,social Benefits and Costs Are Discounted