Question
A major city in West Canada is planning to build a new wastewater treatment plant to accomodate the increasing water consumption of the city. Plant
A major city in West Canada is planning to build a new wastewater treatment plant to accomodate the increasing water consumption of the city. Plant construction will start in 2022 and is going to take five years at a cost of $30 million per year. After construction is completed, the cost of operation, maintenance is expected to be $2 million for the first year, and to increase by 1% per year thereafter. The slavage/scrap value of the waste water treatment plant at the end of year 2056 is estimatedto be $6 million. Consider the present to be the end of 2017/beginning of 2018 and the interest rate to be 6%. a) Draw a cash flow diagram for this project (from present till end of year 2056) b) Find the Present Worth of this project? c) Find the Future Worth of this project?
I am looking for detailed answer as to why are we using certain formula. There are solutions online, but they are not clear. If you could provide hand written detailed solution.
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