This document provides scenarios for a benefit-cost analysis of merging the prosecutorial offices of Hagerstown, MD and Washington County, MD. Scenario A recommends the merger based on a positive net present value when using no discounting. Scenario B applies a 2% discount rate and also recommends the merger. Scenario C separates the analysis into the perspectives of Washington County, Hagerstown, and the State of Maryland. With a 4% discount rate, Washington County and the State recommend the merger while Hagerstown does not. Scenario D updates Scenario C with a reduced cost for Hagerstown. Now all jurisdictions recommend the merger. The document concludes by asking for concerns about solely basing

1. 1. Setup and conduct a spreadsheet benefit-cost analysis of several scenarios of proposals that
would merge Hagerstown, MD, and Washington County, MD, prosecutorial offices. For this
problem, you must submit an Excel spreadsheet electronic file (.XLSX/.XLS) and clearly state your
answer to each item below, showing work for each scenario below. Organize/enter the data,
compute net benefits (NB), and net present value (NPV) to make a recommendation based on 10
years of forecasted impacts and values.
a. In Scenario A, use the assumptions below. Based solely on net present value (NPV), do you
recommend the proposal?
Initial costs are paid immediately (year 0). In future years, costs and benefits should be accounted
at end of the year (the usual convention).
Annual benefits are $7 in years 2-4, and $12 in years 5-10.
Initial costs are $20.
Annual costs are $10 in years 1-4, and $5 in years 5-10.
Use no discounting.
b. In Scenario B, apply a discount rate of 0.02 (2%). Recalculate NPV. What do you recommend?
c. In Scenario C, separate everything into 3 groups: Hagerstown and Washington County and the
State of Maryland. Recalculate NPV for each group. Using the assumptions below, what does
each jurisdictions leaders recommend?
- Washington County
Annual benefits are $4 in years 2-4, and $10 in years 5-10.
Initial costs are $12.
Annual costs are $6 in years 1-4, and $3 in years 5-10.
- Hagerstown
Annual benefits are $3 in years 2-4, and $2 in years 5-10.
Initial costs are $8.
Annual costs are $4 in years 1-4, and $2 in years 5-10.
- The State includes the Hagerstown and Washington County but has no other costs or benefits.
- Use a discount rate of 0.04 (4%). This is greater than in A & B.
d. In Scenario D, you should update Scenario C. Suppose that an accounting error is found and
the Hagerstowns costs for years 0-4 are halved (reduced by 50%). Now, what does each
jurisdictions leaders recommend?
The Hagerstowns initial costs are $4
The Hagerstowns annual costs are $2 in years 1-4. (Annual costs in years 5-10 remain $2.)
e. Finally, consider this BCA application (merging Hagerstown and Washington County
prosecutorial offices). Assume that the numbers above are very accurate (no uncertainty or
forecast error) for what they capture. What concerns, if any, might you have about changes being
made to the judicial system solely based on this BCA analysis?
Be specific. Please write 1-2 paragraphs. This does not need to be a long answer, but it should be
thoughtful.