A public utility in a medium-size city is considering two cash rebate programs to achieve water conservation. Program 1, which is expected to cost an average of $60 per household, provides a rebate of 75% of the purchase and installation costs of an ultra-low-flush toilet ($100 max). This program is projected to achieve a 5% reduction in overall household water use over a 5-year evaluation period. This will benefit the citizenry to the extent of $1.25 per household per month. Program 2 involves turf replacement with xeric (low water need) landscaping. The program is expected to cost $500 per household, but it will result in reduced water cost estimated at $8 per household per month (on the average). Use the B/C method at a discount rate of 0.5% per month to determine which program, if any, the utility should undertake. The programs may be (a) mutually exclusive, or (b) independent
A public utility in a medium-size city is considering
two cash rebate programs to achieve water conservation.
Program 1, which is expected to cost an
average of $60 per household, provides a rebate of
75% of the purchase and installation costs of an
ultra-low-flush toilet ($100 max). This program is
projected to achieve a 5% reduction in overall
household water use over a 5-year evaluation period.
This will benefit the citizenry to the extent of
$1.25 per household per month. Program 2 involves
turf replacement with xeric (low water
need) landscaping. The program is expected to
cost $500 per household, but it will result in reduced
water cost estimated at $8 per household per
month (on the average). Use the B/C method at a
discount rate of 0.5% per month to determine
which program, if any, the utility should undertake.
The programs may be (a) mutually exclusive,
or (b) independent
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