Acountry concerned about climate change is exploring the nuclear power alternative as a means of reducing fossil fuel emissions. the cost of new nuclear plant construction would be 400 per year from year 0 to year 4, and operating costs would be 50 per year. the benefit from electricity production is projected to be 350 per year starting in year 5. the indirect benefit from the reduction of co2 emissions would amount to another 80 per year (also starting in year 5). the country must, however, contend with the risk of nuclear meltdown (the problem of long-term disposal/storage of nuclear waste will be ignored). the cost of a nuclear meltdown is catastrophically high – 50,000 – but the event is unlikely. under a "low-risk" scenario, there is a 0% probability of meltdown through year 25, and a 1.2% probability thereafter. with "moderate" risk, there is a 0.15% probability from year 0 to 25, 0.9% probability from years 26 to 50, and a 2% chance thereafter. finally, in the case of "high risk," the probabilities of nuclear meltdown are 0.5% from years 0 to 30, 2% from years 31 to 100, and 5% thereafter.

a) calculate the net benefit from year 0 to 200, and discount it for each year under the low-risk, moderate-risk, and high-risk scenarios, and do this assuming both a 5% and a 10% social discount rate (i. e., you should have six numbers for each year).

b) calculate the 200-year net present value for each of these six scenarios. this amounts to one number for each case, each summing across the 200 years. comment on your findings.

c) finally, assume that there is a 50% chance of the low risk scenario being correct, a 25% of the moderate risk scenario being right, and finally a 25% probability that the high-risk assumption is appropriate. what, then, is the net present value assuming a sdr of 5%? of 10%? would your conclusion about whether or not the nuclear power alternative is sound be robust? discuss