Suppose That a Year of Life Is Worth $100,000, and That

question 1

Multiple Choice

Suppose that a year of life is worth $100,000, and that the cost of a new treatment for HIV is $30,000 per year, and that it increases the life expectancy by 3 years. If the discount rate is 3 percent, is the HIV treatment worth the cost to a 30-year-old male who expects to live for 2 more years without treatment.

• A) No, since the present value of costs are greater than the present value of benefits.
• B) Yes, since the present value of benefits are greater than the present value of costs.
• C) Yes, since the present value of benefits are equal to the present value of costs.
• D) Not enough information is provided to make a determination.

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