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Discount rate <br /> <br />PB used a real discount rate of 3.0 % in 1998 to present value future benefits and costs to <br />1998 dollars. MnDOT used a higher discount rate of 4.5% for its present value <br />calculations. Using a higher discount rate as MnDOT did has the effect of reducing the <br />value of a Project (and it's benefit/cost ratio) in cases like this one where there are a lot of <br />up-front costs and net benefits (benefits greater than costs) in future years. <br /> <br />These are the main differences in the PB study of the Elk River line and the MnDOT <br />study of the Northstar Line. To trace the magnitude of the changes to the calculated costs <br />and benefits in the two studies, ALA redid the PB calculations in detail and then changed <br />one assumption at a time to show how much the costs and benefits changed at each step. <br />The results of that analysis are included in Table 5 appended to the end of this report. <br />Not surprisingly the tripling the ridership had the greatest dollar impact on benefits <br />followed by adding in the value of the capital stock. Large changes in costs came from <br />using the capital costs and operating costs for the 82-mile corridor compared to the <br />shorter Elk River route. <br /> <br />11 <br /> <br /> <br />