Question

Problem 03.056 Shifted Decreasing Gradients The City of San Antonio is considering various options for providing water in its 50-year plan, including desalting. One brackish aquifer is expected to yield desalted water that will generate revenue of $4.1 million per year for the first 5 years, after which less production will decrease revenue by 10% per year each year. If the aquifer will be totally depleted in 21 years, what is the presentlworth of the desalting option revenue at an interest rate of 7% per year? The present worth of the desalting option revenue at an interest rate of 7% per year is determined to be $ 29.5

Answer 1

$ 31.32

Year	CashFlow	DF	PV
1	4.1	0.93	3.83
2	4.1	0.87	3.58
3	4.1	0.82	3.35
4	4.1	0.76	3.13
5	4.1	0.71	2.92
6	3.69	0.67	2.46
7	3.32	0.62	2.07
8	2.99	0.58	1.74
9	2.69	0.54	1.46
10	2.42	0.51	1.23
11	2.18	0.48	1.04
12	1.96	0.44	0.87
13	1.76	0.41	0.73
14	1.59	0.39	0.62
15	1.43	0.36	0.52
16	1.29	0.34	0.44
17	1.16	0.32	0.37
18	1.04	0.30	0.31
19	0.94	0.28	0.26
20	0.84	0.26	0.22
21	0.76	0.24	0.18
			31.32