The subsidized cost of producing water

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Reference no: EM13706839

The subsidized cost of producing water at the El Paso Water Utilities (EPWU) Kay Bailey Hutchison (KBH) desalting plant is $1.56 per 1000 gallons. Under a contract that EPWU has with Fort Bliss, the utility sells water to the Army post at a discounted price of $1.28 per 1000 gallons. (The KBH plant was built on Army property.) If Fort Bliss uses 2 billion gallons of water each year, what is the present worth of the discount for a 20-year period at an interest rate of 6% per year?

Reference no: EM13706839

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