A major city in Eastern Canada is planning to build a new wastewater treatment plant to...

 

Transcribed Image Text:

A major city in Eastern Canada is planning to build a new wastewater treatment plant to accommodate the increasing water consumption of the city, Plant construction will start in 2018 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 salvage/scrap value of the wastewater treatment plant at the end of year 2052 is estimated to be $6 million. Consider the present to be the end of 2014/beginning of 2015 and the interest rate to be 6%. 1. a) Draw a cash flow diagram for this project (from present till end of year 2052) 2. b) Find the Present Worth of this project 3. c) Find is the Future Worth of this project A major city in Eastern Canada is planning to build a new wastewater treatment plant to accommodate the increasing water consumption of the city, Plant construction will start in 2018 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 salvage/scrap value of the wastewater treatment plant at the end of year 2052 is estimated to be $6 million. Consider the present to be the end of 2014/beginning of 2015 and the interest rate to be 6%. 1. a) Draw a cash flow diagram for this project (from present till end of year 2052) 2. b) Find the Present Worth of this project 3. c) Find is the Future Worth of this project