Suppose you are asked to evaluate a policy that addresses urban smog problem in the Chicagoland area. This policy is one of the several ozone-reducing policy options evaluated using cost-benefit analysis. The policy will be implemented over a period of three years.
Assume there are 3 million adult residents in the Chicagoland area to whom the benefits would accrue. Also assume that the estimated present value of costs (PVC) for this policy option is $2.5 billion. Is this policy option feasible according to
i) Cost-Benefit Ratio?
ii) Present Value of Net Benefits?