Discounting

1) Consider a project which begins immediately in period 0 and will continue for 3 additional years. It provides benefits and costs in each period as indicated in the table.

Period	B	C
0	100	50
1	0	50
2	0	50
3	50	50

a) If you evaluate the project using an 8% discount rate, what is the net present value of the project? From a benefit-cost perspective should you do the project?

b) If you evaluate the project using a 0% discount rate, what is the net present value of the project? From a benefit-cost perspective should you do the project?