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You are asked to conduct a benefit - cost analysis to recommend if the local government should undertake a project to develop Gringoland Marine Park.

You are asked to conduct a benefit-cost analysis to recommend if the local government should undertake a project to develop Gringoland Marine Park. A set of costs and benefits is given for a 10-year period. Project 1. Gringoland Marine Park Years 012345678910Costs (thousands of $) Construction costs1250 Recurring costs 130130130130130130130130130130Foregone recreation2020202020202020202020Benefits Increased tourist revenue300300300300300300300300300300300Net Benefit: NPV@5%------------------ NPV@10%------------------- a. What is the role of discount rate in the benefit-cost analysis of an environmental project? b. Should you recommend the project if the discount rate is 5%? Why or why not? Show all the necessary calculations. c. Should you change your recommendation if the discount rate is 10%? Why or why not? Show all the necessary calculations.

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