The City of San Antonio is considering various options for providing water in its 50-year plan, including desalting. One brackis
h 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
1 answer:
Answer:
$27,980,812
Explanation:
The computation of the present worth at the interest rate of 9% for the 21 years is to be shown on the excel spreadsheet.
There are two sheets attached one is of final values, and the other one is a formula sheet in which all formulas are to be shown so that it is easy to reach to the final answer
Therefore after applying the formulas, the present value would be $27,980,812
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Answer:
Explanation:
For this case the total payment is $320000, and she pays $40000 so the remain amount to pay would be:
$320000-40000=$ 280000
For this case we assume that the annual interest rate is APR=5.7% =0.057 on fraction.
The total number of years are 20. For this case n represent the number of payments per year and since we have monthly payments then n =12.
In order to find the PMT we can use the following formula:
On the last expression the APR needs to be on fraction and P represent the principal amount, for this case P = $280000. So if we replace we got:
And we can verify this using the following excel function: "=PMT(0.057/12,12*20,-280000)"