A wastewater collection network project in a city produces benefits, as expressed in Figure 8.1 :

the $100,000 profit in year 1 is increased in 10 years on a uniform gradient to $1,000,000. Then it reaches $1,375,000 in year 25 with a uniform gradient of $25,000/year and it remains constant at $1,375,000 each year until year 40, the end of the project life span. Assume an interest rate of 4%. What is the present worth (PW) of this project?

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Benefit ($) values. 01 $100,000 $1,025,000 $1,000,000 10 11 FIGURE 8.1 Cash flow diagram for Example 8.2. $1,375,000 $1,375,000 25 40 Year