1.Portland Parks and Recreation is considering putting in navigational signs to help people avoid getting lost while visiting Forest Park

Here are the key facts about the project

The signs are installed immediately and last a total of 3 years.

The cost of putting in the signs is $7000 payable immediately.

Portland Parks and Recreation will have to pay $1000 per year to maintain the signs

At the end of the three-year period, the agency will need to pay $500 to dispose of the worn-out signs.

Annual social benefits (i.e. consumer surplus) from the project are $4000.

All costs and benefits except the cost of putting in the signs accrue at the end of each year.

The official annual discount rate of Portland Parks and Recreation is 5%/year.

The investment decision is based on weighing the costs and benefits of the project.

a.The 5% discount rate is calculated based on financial interest rates.Please mention two adjustments to interest rates that typically must be made to estimate social discount rates.

b Assuming all the above facts are correct, should the Portland Parks and Recreation develop the interpretive center?Please explain and clearly show your calculations.

c. Suppose that instead of accruing at the end of each year all costs and benefits except the final disposal costs accrue at the beginning of the year.Should the agency develop the center?Please explain and clearly show calculations.