Purchases surface water for treatment

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Reference no: EM131001910

EI Paso Water Utilities (EPWU) purchases surface water for treatment and distribution to EPWU customers from EI Paso Country Water Improvement District during the irrigation season. A new contract between the two entities resulted in a reduction in future price increases in the cost of the water from 8% per year to 4% per year the next 20 years. If the cost of water next year (which is year 1 of the new contract) will be $260 per acre-foot, what is the person worth of the savings ( in $/acre-ft) to the utility between the old and the new contracts? Let the interest rate equal 10% per year.

Reference no: EM131001910

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