In problem #4 use 2 years @ $2 million per year (rather than 4 years) and use 2 years @ $750,000 per year (rather than 20 years) and calculate the present value of net benefits over the entire 4 year period using a discount rate of r = .1 and then r = .15.

A cost-benefit analysis of a new irrigation project indicates that the net benefits (B-C) of the project in each of the first four years will be $2 million. Thereafter, the project will yield positive net benefits of $750,000 for the next 20 years. Calculate the present value of benefits minus costs when the social rate of discount is 10 percent. You can use spreadsheet software to do this calculation. Does the program merit approval? How would the present value of the net benefits change if the social rate of discount were 15 percent? A cost-benefit analysis of a new irrigation project indicates that the net benefits (B-C) of the project in each of the first four years will be $2 million. Thereafter, the project will yield positive net benefits of $750,000 for the next 20 years. Calculate the present value of benefits minus costs when the social rate of discount is 10 percent. You can use spreadsheet software to do this calculation. Does the program merit approval? How would the present value of the net benefits change if the social rate of discount were 15 percent