Pollution Busters Inc. is considering a purchase of $10$ additional carbon sequesters for $$100,000$ apiece. The sequesters last for only $1$

year before becoming saturated. Then the carbon is sold to the government.

a$.$ Suppose the government guarantees the price of carbon. At this price, the payoff after $1$ year is $$115,000$ for sure. What is the

opportunity cost of capital for this investment?

Opportunity cost of capital

U$.$S$.$ Treasuries with $1$ year to maturity

U$.$S$.$ Treasuries with $2$ year to maturity

U$.$S$.$ Treasuries with $3$ year to maturity

b$-1.$ Suppose instead that the sequestered carbon has to be sold on the London Carbon Exchange. Carbon prices have been

extremely volatile, but Pollution Busters' CFO learns that average rates of return from investments on that exchange have been about

$20\%.$ She thinks this is a reasonable forecast for the future. What is the opportunity cost of capital in this case?

b$-2.$ Is the purchase of additional sequesters a worthwhile capital investment?

Yes Please get this correct! I can't afford to have this wrong.