Question 4 (25 points) (Based on a problem by Blank/Ireson/Leavenworth)

You are the water conservation supervisor of a local water utility that is considering three programs to promote and achieve water conservation. Program A involves providing customers a rebate for the installation of an ultralow-flush toitet, which is expected to cost an average of $60 per household. This program as expected to save customers $1.50 per household per month.

Program 8 involves providing customers rebate to replace their lawns with more drought tolerant vegetation coupled with the installation of a new irrigation system. The new irrigation system includes a more efficient drip system controlled by a weather-based irrigation controller (WBIC) which continually adjusts the amount of water the plants receive based on their actual needs by taking into account site conditions such as temperature and precipitation. Program B would cost an average of $550 per household. The expected saving of this program is estimated at $11.50 per household per month.

Program C involves a targeted public information campaign to educate and inform customers on ways they can conserve water. The program is expected to cost $800 per household and the expected savings anticipated to be $13 per household per month.

Which program, if any, should be chosen by the utility if the study period is 5 years and the interest rate is 6% p.a. compounded monthly? Use the incremental B/C method.

Program C involves a targeted public information campaign to educate and inform customers on was they can conserve water. The program is expected to cost $800 per household on ways they can conserve water. The program is expected to cost $800 per household and the expected savings is anticipated to be $13 per household per month. Which program, if any should be chosen by the utility if the study period is 5 years and the interest rate is 6% p.a. compounded monthly? Use the incremental B/C method