Sales of bottled water in the U.S. totalled 16.3 gallons per personin 2004. Evia

Question

Sales of bottled water in the U.S. totalled 16.3 gallons per personin 2004. Evian Natural Spring Water costs 40 cents perbottle. A municipal water utility provides tap water for$2.10 per 1000 gallons. If the average person drinks 2bottles of water per day or uses 5 gallons per day in getting thatamount of water from the tap, what are the present worth values ofdrinking bottled water or tap water per person for 1 year? Use an interest rate of 6% per year, compounded monthly, and 30days per month. even if you set up the solution, it would be great. any help would be great, i will rate lifesaver even if youjust set up the solution even if you set up the solution, it would be great. any help would be great, i will rate lifesaver even if youjust set up the solution

Explanation / Answer

This is a problem on the present value of anannuity.

Alternative 1- Drink bottled water

PMT or periodicpayments                 $0.80 ( 0.40 * 2 )

Number ofperiods                             12

Rate ofInterest                                  6% / 12

Now just plug in these values & you get the answer!!

Alternative 2 Drink water from the tap.

All the other things will remain the same.

Only PMT                 ( 5 * 2.10 ) / 1000

So just go ahead !!

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