Part 1. Suppose an environmental project to improve a local habitat nearby to community X has the following flow of costs and benefits: o 600,000 , 225,000 > 375,000 B3 150,000 Note that the costs are incurred up front while only benefits are received in later periods (1.A) Arguments have been made that the discount rate used should be consistent with the way consumers trade between present and future consumption, i.e. the discount rate should be equal to a consumer's rate of time preference. It has therefore been put forth that this rate could either be the interest rate on a typical savings account or the yield on, say, a three year treasury bill. Suppose that this rate is 5%, thus calculate the net present value (NPV) of the above flow of costs and bene fits with i = .05 (1.B) It has also been argued that one should use the marginal productivity approach in choosing the proper discount rate and that a good estimate of this could be the interest rate that banks charge firms for borrowing. Suppose that this rate is 10%. Calculate NPV using i = .10. (1.C) Finally use i = .15 to calculate NPV of the above cost-benefit stream. How robust is the discounted flow of net benefits from the project to the discount rates used