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2. You run a mining operation and need to make plans about how to extract minerals. Your current plan is Plan A and the annual
2. You run a mining operation and need to make plans about how to extract minerals. Your current plan is "Plan A and the annual net benefits are listed in the table below. Your partner suggests you follow a different extraction plan, Plan B, whose annual net benefits are listed below. 0 Year Plan A Plan B 7 10 1 6 5 2 3 9 4 5 5 4 6 7 (a) Under a discount rate of 10 percent (r = 0.1), what is the present value of plan A? (b) Under a discount rate of 10 percent (r = 0.1), what is the user cost associated with choosing Plan B rather than choosing Plan A? (c) Under a discount rate of 10 percent (r = 0.1), which plan should you chose? Does this change if the discount rate is 1 percent (r = 0.01)
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