A new Water Treatment Plant will cost a certain city 2,000,000 SR to build and 150,000 SR per year to operate for its 30-year life. At the end of 30 years, the salvage value will be 0. Due to more efficient operation of the water plant, it is expected to lower the cost of utility bills for each customer 50 SR per year. There are 6,000 customers that are billed in the city. The plant will reduce air quality by an estimated 5 SR per resident per year. The population of the city is currently 18,000 and is expected to remain relatively constant over the life of the plant. If 3% is used for the evaluation of public works projects, should the Water Treatment Plant be built?

Answer rating: 100% (QA)

Yes the Water Treatment Plant should be built The total cost savings for the citys customers over the 30year life of the plant would be 3000000 SR 50 ... View the full answer