Suppose That a Year of Life Is Worth $150,000 and That

question 42

Multiple Choice

Suppose that a year of life is worth $150,000 and that a new treatment for diabetes increases life expectancy for a 40-year old woman by 2 years. Suppose that life expectancy without treatment is 75 and that the discount rate is 3 percent. Determine the present value of the increased life expectancy resulting from the new treatment.

• A) $300,000
• B) $194,000
• C) $102,002
• D) $51,755

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