A dam is proposed on a stretch of wild river, a river that is currently used for recreation. The dam will generate electricity. The dam will have a useful life of 50 years, after which the reservoir will be full of sediment and the dam will need to be removed. The following are the characteristics of the dam:

Initial cost: $100,000,000 Electricity purchased: 100,000 Mwh per year, @ $100/Mwh. Cost of decommissioning dam: $10,000,000 Value of recreation lost: $5,000,000 per year. 200 words minimum)

a. If the social discount rate is 3% per year, is the dam a good idea? b. If the social discount rate is 10% per year, is the dam a good idea? c..Calculate the cutoff discount rate, c, such that the dam is a good idea for discount rates c.