Suppose

College proposes to build a new outdoor swimming pool. The project costs

$$10,000$ this year to build, and $$2,000$ in the following $10$ years to maintain. The benefits are

projected to be $$4,000$ every year for $11$ years including this year. Suppose the interest rate and

discount rate are $5\%.$

a$.$ What is the net present value of total cost?

b$.$ What is the net present value of total benefit?

c$.$ Should we pass this project?

d$.$ What if the discount rate is $10\%?$

e$.$ How should we choose the discount rate?