Time Preference and the Discount Rate
The supreme value is not the future but the present. The future is a deceitful time that always says to us, “Not yet,” and thus denies us.
—Octavio Paz
Chapter 3 Preview
When you have completed reading this chapter you will:
• know how to calculate and interpret the present value of net benefits by using a procedure that discounts future costs and benefits;
• understand the reason behind discounting and the importance of choosing the appropriate discount rate;
• differentiate between ordinary observable market interest rates available to finance projects and the concept of a social discount rate;
• be attentive to assumptions associated with using different discount rates and how they can bias ...
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