Net Present Value Analysis to Select Public R&D Programs and Valuate Expected Private Sector Participation

One of the main functions of government is to invest taxpayer dollars in projects, programs, and properties that will result in social benefit. Public programs focused on the development of technology are examples of such opportunities. Selecting these programs requires the same investment analysis approaches that private companies and individuals use. Good use of investment analysis approachesto these programs will minimize our tax costs and maximize public benefit from tax dollars invested. This article describes the use of the net present value (NPV) analysis approach to select public R&D programs and valuate expected private sector participation in the programs.