UNIV X350: THE GLOBAL ENVIRONMENT
Global
Issue
Local
Manifestation
Fall 2006
Tech. Analysis 1
Econ. Analysis 1
Tech. Analysis 2
Econ. Analysis 2
Tech. Analysis 3
Econ. Analysis 3
Action
Political
Analysis
Final
Report
Group Project – Economic Analysis
Due Wednesday November 8 or Thursday November 9, at beginning of Activity Session
Each group has chosen to examine a problem that is global in scale and for which local (Cal Poly or SLO or SLO
County) actions could improve the situation. The Economic Analysis provides a method for your group to compare
the merits of the three Technical Approaches your group developed. This short, interim report should show that
you’ve thought about the costs and benefits of your Technical Approaches. This information, with supporting
details, will also form part of your final report.
Benefits—Cost Analysis
The process uses five steps:
1. Specify each approach using a phrase beginning with a verb.
2. Describe quantitatively the inputs and the outputs of each approach.
3. Estimate the annual costs and benefits of each approach.
4. Calculate the Present Values PVN of each year’s costs and benefits and the Net Present Value NPV for each approach.
5. Compare the Net Present Values of all approaches.
You have already completed steps 1 and 2 for your Technical Recommendations assignment. Complete steps 3, 4 and 5 for
this assignment.
Summarize your results in two tables. One table contains the annual entries for each approach’s costs, present value of
costs, benefits, present value of benefits, and present value of the difference (benefits – costs). See Table 1 for an
example. The other table compares the Net Present Values of all approaches. See Table 2 for an example. On the same
page as Table 2, specify each approach using a phrase beginning with a verb.
For each technical approach, determine the total Net Present Value of the approach, including the benefits and the costs
that accrue during each year of the project.
Which Technical Approach has the highest Net Present Value (NPV)? Why?
Which Technical Approach has the lowest Net Present Value (NPV)? Why?
Note that technical approaches may impact different orders of magnitude. If so, scale the approaches to allow comparing
economic costs, benefits, and net present values of different technical approaches using the same unit. Consider using
one of the following units: per person, per thousand people, per square meter, per acre, per dollar of cost, per dollar of
benefit, per kg of pollutant avoided, per liter water saved, per kilowatt saved, etc. Alternately, select another more
appropriate unit.
This assignment doesn’t specify a length for this analysis, but approximately 1-2 pages per Technical Approach will
make the right length for most projects. You must include references (see the guide, ReportReferences.doc, posted on
BlackBoard), not only for sources you read but also for web sites (identify the web site title, author, date updated—if
known, date cited, and list the URL) and people you talk with (give their name, affiliation, title, and contact
information).
Email your report to dbraun@calpoly.edu as one MS Word (.doc) file OR one .pdf file. Carbon copy (cc:) your
email to each member of your group.
The filename should include your activity instructor’s last name, group number and the initials of each member of
your group. For example, “Braun2- XA,DG,QP,RR.doc”, “Evans3-BB,WJ,EM,DR.doc” or “Ruehr3OA,RL,BP,MS.pdf”
UNIV X350: THE GLOBAL ENVIRONMENT
Fall 2006
Define the present value PVN expressed in dollars of an Amount expressed in dollars at a discount rate i in period N:
PVN 
Amount
i N
(1 
)
100
Amount represents either a cost or a benefit expressed in dollars. Use a discount rate i=5%, unless another discount rate
is more appropriate.
The present value PV of the total costs of the approach equals the sum of the present values of each year’s costs:
Present Value of Total Costs
  PVN , where PVN represents each year’s costs.
N
The present value PV of the total benefits of the approach equals the sum of the present values of each year’s benefits:
Present Value of Total Benefits
  PVN , where PVN represents each year’s benefits.
N
The Net Present Value NPV of the approach equals the difference between the Present Value of Total Benefits and the
Present Value of Total Costs:
NPV = (Present Value of Total Benefits) – (Present Value of Total Costs)
The spreadsheet available on BlackBoard may assist you in your calculations, but you do not have to use it, if you don’t
want to.
Table 1 – Annual Cost Benefit Calculations for Approach 1
Table 2 – Net Present Value Comparison for all approaches
UNIV X350: THE GLOBAL ENVIRONMENT
Fall 2006
Economic Analysis Grading Guide
Topic
Clearly specify each of three technical approaches with a phrase
beginning with a verb.
Clearly list the costs of each technical approach and explain how
you determined the values of the costs. Explain why the costs
increase or decrease each year.
Enter costs correctly in table 1 for each technical approach.
Correctly determine present value (PV) for total costs according to
PV
  PVN , where PVN represents each year’s costs.
Braun
Points Possible
1.5
3
1
N
Clearly list the benefits of each technical approach and explain
how you determined the values of the benefits. Explain why the
benefits increase or decrease each year.
Enter benefits correctly in table 1 for each technical approach.
Correctly determine present value (PV) for total benefits according
to PV
  PVN , where PVN represents each year’s benefits.
3
1
N
Correctly determine net present value (NPV) for each approach
according to NPV = (Present Value of Total Benefits) – (Present
Value of Total Costs).
Use an appropriate unit to compare the three approaches.
Summarize results in Table 2, and compare the approaches.
Answer questions regarding highest and lowest NPV.
Overall quality, including writing, organization, and clarity
1.5
Total
14
3
Comments:
Number pages.
Apply the paramedic method by UCLA Professor Richard Lanham. See
http://writing2.richmond.edu/writing/wweb/concise.html or perform a web search. As a nice last step to this
method, before you send your work to the printer, read your writing OUT LOUD to catch spelling, grammar,
and logic errors.
Cite references properly, as specified via
http://www.ee.calpoly.edu/~dbraun/courses/TGE/ReportReferences.html