2. (30 points) You are analyzing various programs to reduce water pollution from poultry operations. In consultation with your staff, you have developed the following matrix of effects where PV = Present Value and BOD = Biological Oxygen Demand." STANDARD STANDARD STANDARD POLLUTION A B TAX 60 205 65 75 5 1,000 22.5 2,200 7 1,650 20 1,500 PV TOTAL COST ($ MILLION) ANNUAL PLANT COSTS ($ MILLION) FOOD PROCESSING JOBS LOST TONS OF BOD REDUCED (MILLIONS) $/TON OF BOD REMOVED PV TOTAL BENEFITS ($ MILLION) 0.8 60 80 3 150 170 1 70 125 1.2 50 140 a. What is the net present value of each alternative? Which alternative has the highest net benefits? b. Calculate the benefit-cost ratio for each alternative. Which alternative has the highest benefit-cost ratio? c. Which alternative gives the "biggest bang for the buck" -that is, has the lowest cost per ton of pollution removed? d. Based on your answers (a)-(C), which alternative is the most efficient? Explain e. Which alternative do you expect (i) labor unions, (ii) environmentalists, and (iii) food processors to support, if one of these will be enacted? Why? Explain. f. Who, if anyone, do you expect to support the efficient alternative? Why? Explain. 2. (30 points) You are analyzing various programs to reduce water pollution from poultry operations. In consultation with your staff, you have developed the following matrix of effects where PV = Present Value and BOD = Biological Oxygen Demand." STANDARD STANDARD STANDARD POLLUTION A B TAX 60 205 65 75 5 1,000 22.5 2,200 7 1,650 20 1,500 PV TOTAL COST ($ MILLION) ANNUAL PLANT COSTS ($ MILLION) FOOD PROCESSING JOBS LOST TONS OF BOD REDUCED (MILLIONS) $/TON OF BOD REMOVED PV TOTAL BENEFITS ($ MILLION) 0.8 60 80 3 150 170 1 70 125 1.2 50 140 a. What is the net present value of each alternative? Which alternative has the highest net benefits? b. Calculate the benefit-cost ratio for each alternative. Which alternative has the highest benefit-cost ratio? c. Which alternative gives the "biggest bang for the buck" -that is, has the lowest cost per ton of pollution removed? d. Based on your answers (a)-(C), which alternative is the most efficient? Explain e. Which alternative do you expect (i) labor unions, (ii) environmentalists, and (iii) food processors to support, if one of these will be enacted? Why? Explain. f. Who, if anyone, do you expect to support the efficient alternative? Why? Explain