Question

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 present worth of the desalting option revenue at an interest rate of 9% per year?

The present worth of the desalting option revenue at an interest rate of 9% per year is determined to be?

Answer 1

YEAR	PAYMENT	PVF @9%	PRESENT VALUE
1	4100000	0.917	3761468
2	4100000	0.842	3450888
3	4100000	0.772	3165952
4	4100000	0.708	2904543
5	4100000	0.650	2664719
6	3690000	0.596	2200226
7	3321000	0.547	1816701
8	2988900	0.502	1500028
9	2690010	0.460	1238555
10	2421009	0.422	1022660
11	2178908	0.388	844398.5
12	1961017	0.356	697209.7
13	1764916	0.326	575677.8
14	1588424	0.299	475330.3
15	1429582	0.275	392474.5
16	1286623	0.252	324061.5
17	1157961	0.231	267573.7
18	1042165	0.212	220932.5
19	937948.5	0.194	182421.3
20	844153.6	0.178	150623.1
21	759738.3	0.164	124367.7
Total present value of Revenue			27,980,811