Let us assume that your decision to start switching to paper bags instead of plastic bags translate into a total Environmental benefits of $100,000 in 10 years from now. Also, let us assume that the discount rate (r) = 0.5.

a)What is the present value of future benefits that you expect to receive in 10 years from now because of this switch?

b)Suppose the discount rate increases to 0.8. What is the present value of future benefits that you expect to receive in 10 years from now?

c) What can you conclude from your two answers above?