Reference no: EM131022534
There is a proposal to remove a hydro dam in the state of Washington. The cost to the government of removing is the loss of $5,000,000 per year in profits from the sale of electricity for the next seven years. If the dam is removed, the salmon fishery will slowly be restored. In the initial year (t=0) the profits made by those fishing would be $1,000,000. In each of the next six years the profits would be $2,000,000, $4,000,000, $6,000,000, $8,000,000, $10,000,000, and $12,000,000. [Assume benefits and costs in years t=7 and beyond are zero]
a) If the governments discount rate is 10% what is the net benefit of a project to remove the dam?
b) If the discount rate is 5%?
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: There is a proposal to remove a hydro dam in the state of Washington. The cost to the government of removing is the loss of $5,000,000 per year in profits from the sale of electricity for the next seven years. If the dam is removed, the salmon fisher..
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