Question: The city of Metropolitan added a new subway station in
The city of Metropolitan added a new subway station in a neighborhood between two existing stations. After the station was built, the average house price increased by$10,000 and the average commute time fell by 15 minutes per day. Suppose that there is one commuter per household, that the average commuter works 5 days a week, 50weeks a year, and that the benefits of reduced commuting time apply to current and future residents forever. Assume an interest rate of 5%. Produce an estimate of the average value of time for commuters based on this information.
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