Calculate the net benefits for each year

A local government is calling for proposals for the use of a coral reef. They have received two proposals: one for a marine park, the other for a coral mining project. Below are the expected costs and benefits of each project. Project 1. Marine Park Years 0 1 2 4 5 6 7 8 9 10 Costs ($) Construction 1250 Recurring costs 130 130 130 130 130 130 130 130 130 130 130 Foregone recreation 20 20 2 20 20 20 20 20 20 20 20 Benefits ($) Tourist revenue 300 300 300 300 300 300 300 300 300 300 300 Project 2. Coral Mine Years 0 2 3 5 6 7 8 9 10 Costs ($) Extraction costs 3000 Costs of coastal erosion 200 200 200 200 200 200 200 200 200 200 200 Benefits ($) Limestone revenue 4500 Evaluate the following statement: At a discount rate of 5% the present value of the marine park is higher than the present value of the coral mining project. Hints (This is much easier to do in Excel): 1. Calculate the net benefits (NBt) for each year (benefits - costs) 2. Calculate the net present value for each year (NPV+) using the following formula (r is the discount rate): N Be NPVt = (1+r) 3. Sum the net present value for each year to get the total net present value of each project