Answer: Discount rates are used to determine today's value of money paid or received at some future time.
This calculation is used in the cost-benefit analysis in order to place all economic flows of a project that occur at different points in time into a single year currency so that costs and benefits can be compared.
The rates used are typically around 10%, but try to analyze them with other rates between 5% and 15% to determine if the viability of the project is sensitive to the discount rate. It is defined by World Bank or the government of the country concerned.
<span>Resources are scarce because economic goods not have an
infinite supply. As a result, we have to make decisions on how to allocate them
to serve our needs. An example of a scarce resource is gas. Gas powers our cars
and is also used in electricity generation. As our population increases, so
does the demand for gas grows. Gas is scarce has it does not exist in infinite
quantities and requires resources to be converted from oil in the ground to
gas.</span>