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The City of San Antonio is considering various options for providing water in its 50-year plan,...

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 4 years, after which less production will decrease revenue by 10% per year each year. If the aquifer will be totally depleted in 24 years, what is the present worth of the desalting option revenue at an interest rate of 6% per year?

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Answer #1

The present value of the revenue stream can be expressed as

Present worth of revenue = $ 31.78 million.

In case if we have to calculate for 50 years then

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