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Define new law of improve drinking water quality

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Question: Suppose that the government of Aqualand is considering a new law that would improve drinking water quality. The cost of complying with the new regulation is $100 million. The benefits of improved drinking water are estimated to be $250 million, but these benefits will occur 25 years from now.

a. At a discount rate of 5 percent, do you recommend that Aqualand institute this new regulation?

b. Would your recommendation change if the discount rate were 3 percent?

Reference no: EM131581471

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