Remember, we use valuation to price non-market goods, discounting to compare money across time, and expected value to handle uncertainty. These three tools work together to give us a policy's Net Present Value (NPV).
Engagement Message
Which of these three tools do you think is most open to debate?
Type
Multiple Choice
Practice Question
To estimate the value people place on a pristine, remote wilderness area they may never visit, which valuation method would be most appropriate?
A. Market Prices B. Revealed Preference C. Contingent Valuation D. Travel Cost Method
Suggested Answers
- A
- B
- C - Correct
- D
Type
Fill in The Blanks
Markdown With Blanks
A project will generate a one-time benefit of $1,000,000 in 2 years. Using a discount rate of 7%, what is its present value? (PV = FV / (1+r)^n)
The future value is 1,000,000 / (1.07)², which equals approximately [[blank:$873,439]]. This calculation is called [[blank:discounting]].
