Engineering Economy 7th Edition by Leland Blank ,Anthony Tarquin

تمرين 45

El Paso Water Utilities (EPWU) purchases surface water for treatment and distribution to EPWU customers from El Paso County Water Improvement District during the irrigation season. A new contract between the two entities resulted in a reduction in future price increases in the cost of the water from 8% per year to 4% per year for the next 20 years. If the cost of water next year (which is year 1 of the new contract) will be $260 per acre-foot, what is the present worth of the savings (in $/acre-ft) to the utility between the old and the new contracts Let the interest rate equal 6% per year.