A town is considering two renewable energy projects: project ‘Green’ with an expected life of 24 years and project ‘Recycle’ with an expected life of 8 years. Project ‘Green’ would cost $2.25 million to construct and yield net benefits of $170,000 at the end of each of the 24 years. Project ‘Recycle’ would cost $180,000 to construct and yield net benefits of $40,000 at the end of each of the eight years. Using a real discount rate of 5 percent, which project offers larger net benefits?
