Project to reduce consumption of cigarettes is proposed

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Reference no: EM131173144

A project to reduce consumption of cigarettes is proposed. The project will cost $1 Million per year over 20 years and will reduce smoking between 1% and 3% for a period of 40 years. The estimated reduction in health care costs of a one percentage point reduction in smoking is approximately $400,000. Using a 3% discount rate:

a) Determine the PV of the cost of this project

b) Determine the PV of the benefit of this project for a 1%, 2% and 3% reduction in smoking

c) Is this project admissible?

Reference no: EM131173144

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