How would your answer to Problem 3 change if the discount rate were 5 percent? What is the most that society would spend to avoid the \($1\) million loss in 20 years with a 5 percent discount rate?

Problem 3

Suppose that a \($150,000\) expenditure today on insulating layers to prevent toxic landfill seepage would eliminate \($1\) million worth of healthcare costs 20 years from now. If the social discount rate were 10 percent, would society be willing to spend the \($150,000\) today?