The city of Carlsbad in California is considering building a​ $300 million​ water-desalination plant. The facility would be the largest in the Western​ Hemisphere, producing 50 million gallons of drinking water a day dash enough to supply about​ 100,000 homes. This​ plant, which uses improved membranes and pumping system to bring down the energy cost to​ $1.10 in electricity to produce​ 1,000 gallons of water. Suppose the desalination plant is fully operational and you expect to operate it continuously for 20​ years, with an estimated salvage value of​ $20 million. The operating and maintenance costs​ (excluding the energy​ cost) amount to​ $15 million the first year and will increase at a rate of​ 3% each year. If the city plans to sell the water for about​ $950 per​ acre-foot (an​ acre-foot is​ 325,851 gallons dash enough water for four people per​ year.), can it recover the capital cost and all other operating​ costs? Assume the​ city's interest rate for this water project is known to be​ 6% compounded annually.
