Fresh water supply system

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A developer of a housing complex on an off-shore island is considering building a pipeline connecting to the fresh water supply system of the government in replacing the existing desalination plant. The cost of fresh water produced from the desalination plant is about HK$ 10/m3 whereas the price of fresh water supplied from the government being HK$ 4.58/m3 . The cost of the pipeline is estimated to be HK$ 1,000,000. Assuming the daily use of water is 240 m3 calculate the number of years of payback of the pipeline if the interest rate is set at 10% p.a.

Reference no: EM131110335

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