Chapter 8 Health: A mosquito-spraying project is planned in the province of Hinterland. The project will cost 1,000,000 francs. Health ofcials expect the spraying to reduce the incidence of malaria for 2 years. In economic terms, the benets consist of -Increased prod'n due to improved worker productivity plus an increase in the LF due to lower morbidity and - the direct value of better health. See table below. Economists argue that health benets (column 5) are too subjective to be included. If you ignore column 5, what is the net present value of the project if a) The interest rate is 15% b) The interest rate is 10% c) To the nearest percentage point calculate the internal rate of return for the project. Year Cost Productivity Output Value Prod'n Total Gains from of Benets Econ increased Health Benets 3+4 LF 3+ 4+5 2008 1,000,000 0 0 0 0 0 2009 0 100,000 500,000 200,000 600,000 800,000 2010 0 100,000 500,000 200,000 600,000 800,000 You will ONLY be tested for a two period model. I just wanted to show you a 3 period model for illustration and reference and to show some possible positive extemalities