Economic

You are the mayor of a small town, and an oil company is offering you $245,000 to locate a new refinery in your town.

A credible non-profit reports this refinery will cost your town $58,000 in health costs each year for the next 15 years that it operates. It also reports that the refinery will bring a temporary boost in jobs as it comes online that will amount to $33,000 per year for the next 8 years. Your discount rate is 6.3%.

i) Write down and upload a picture of an equation that calculates the Net Present Value (NPV) of this choice. Assume that the health costs and labor benefits accrue at the end of each year, i.e., they first occur at the end of the first year. (This equation should use summation formulas.)

ii) Solve for the NPV in the question above. Excel is recommended (either constructing the formula you wrote above by hand or using the NPV function) or a similar program.