you are given the following total cost and total benefit curves regarding a lumber development project. TB = 400Q 2Q^2 TC = 20Q

(d) Compute and interpret the benefit/cost ratio. What policy recommendation would you make regarding the initiation of the project?

(e) Present your solution graphically.

(f) Now assume that both benefits and costs occur once a year for three years (and are identical in each year), i.e. they are a stream of benefits and costs. What is the present value of net benefits of this project, when discounting begins in year 2 (i.e. year 1: i = 0, year 2: i = 1, year 3: i = 2) and r = 0.05?