Engineering Economy – Problem 2.36
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 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 new contracts? Let the interest rate equal 6% per year.
Sample problems and notes are based on the following textbook: Engineering Economy 7th Edition
ISBN-13: 978-0073376301
ISBN-10: 0073376302
Edition: 7
Author: Leland Blank, Anthony Tarquin
Published Date: 2011
