Consider an environmental policy that provides no benefits in the first ten years after implementation, but costs $10,000 per year. In years 11 through 40 the benefits are $30,000 per year, while the costs are still $10,000 per year. During years 41 through 100, there are no costs, and the benefits remain constant at $30,000 per year.

(a) Calculate the net present value of the policy using constant discount rates of 1, 5, and 7 percent.

(b) Find the discount rate that makes the net present value exactly zero.

(c) Calculate the net present value using discount rates that decline over time according to the Weitzman suggestion described above.