Suppose a proposed public policy would cost $500,000 for each of the first three years,

and result in $600,000 worth of benefits in each of the years eight through ten.

a. Calculate the cost-benefit ratio at each of the following discount rates: 0%, 2%, and 5%. Show work.

b. Suppose the benefits of the public policy were only 80 percent certain to materialize. How would that affect your calculations? Show work.