How much needs the discount rate

Reference no: EM131032648

An area is designated for a large re-wilding project and we need to evaluate the net social value of this project. 7 persons derive benefit from this project: In the table below the annual valuation these persons' benefit from the re-wiling is stated:

Person	Anne	Britt	Claus	Done	Erik	Frank	Gitte
TWTP per year	20	35	40	34	30	20	40

There are two types of costs:

- Costs from establishing the area, and buying and transporting the animals: 1000 (only once)
- Maintenance costs: 100 per year

Exercise 1: Calculate the NPV of the project when the time frame is 10 years and argue whether the project should be undertaken. Use a discount rate of 5 %

Exercise 2: How much needs the discount rate be in order for the NPV to be zero

Consider now that we expect that the TWTP for each person increases by 2 % each year because that re-wiling project slowly also produces higher biodiversity and so on.

Exercise 3 : Recalculate the NPV of the project and comment on the changes this makes

Exercise 4: Will your decision from exercise 3.1 change if 20 years instead of 10 years? (Assume again no increase in WTP over time)

Exercise 5: Discus the concept / idea of discounting (take the above results as point of departure for your discussion)

I need this small Question to solve. This is very basic task. If u calculate by excel it will take few time for you.

Reference no: EM131032648

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