ABSTRACT
The successive annual net social benefits are therefore –100, –130, 15 and 260. In general, we can summarize the stream of expected gross benefits less their
costs as (b0 − k0), (b1 − k1), (b2 − k2), . . . , (bn − kn), where b0 and k0 are the social benefits and opportunity costs, respectively, of the initial period, b1 and k1 are the social benefits and opportunity costs of the first period, and so on, the subscript always referring to the period or year. If we now define the net, or excess, social benefit in any tth period or year, Bt as equal to (bt − kt) we can write the above as a stream of net social benefits: B0, B1, B2, . . . , Bn, where the Bs can be negative, zero or positive. This is the stream to which an investment criterion is usually applied.
