Assume that Austin Water purchases surface water from the Lower Colorado River Authority at a cost of $120,000 per month in the months of February through September. Instead of paying monthly, the utility makes a single payment of $930,000 at the end of the year (i.e., end of December) for the water it used. The delayed payment essentially represents a subsidy by the Authority to the water utility. At an interest rate of 3% per year compounded weekly, what is the amount of the subsidy? Assume that Austin Water purchases surface water from the Lower Colorado River Authority at a cost of $120,000 per month in the months of February through September. Instead of paying monthly, the utility makes a single payment of $930,000 at the end of the year (i.e., end of December) for the water ii used. The

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Assume that Austin Water purchases surface water from
the Lower Colorado River Authority at a cost of $120,000
per month in the months of February through
September. Instead of paying monthly, the utility makes
a single payment of $930,000 at the end of the year (i.e.,
end of December) for the water it used. The delayed
payment essentially represents a subsidy by the
Authority to the water utility. At an interest rate of 3% per
year compounded weekly, what is the amount of the
subsidy? Assume that Austin Water purchases surface
water from the Lower Colorado River Authority at a cost
of $120,000 per month in the months of February
through September. Instead of paying monthly, the utility
makes a single payment of $930,000 at the end of the
year (i.e., end of December) for the water ii used. The
delayed payment essentially represents a subsidy by the
Authority to the water utility. At an interest rate of 3% per
year compounded weekly, what is the amount of the
subsidy?
Transcribed Image Text:Assume that Austin Water purchases surface water from the Lower Colorado River Authority at a cost of $120,000 per month in the months of February through September. Instead of paying monthly, the utility makes a single payment of $930,000 at the end of the year (i.e., end of December) for the water it used. The delayed payment essentially represents a subsidy by the Authority to the water utility. At an interest rate of 3% per year compounded weekly, what is the amount of the subsidy? Assume that Austin Water purchases surface water from the Lower Colorado River Authority at a cost of $120,000 per month in the months of February through September. Instead of paying monthly, the utility makes a single payment of $930,000 at the end of the year (i.e., end of December) for the water ii used. The delayed payment essentially represents a subsidy by the Authority to the water utility. At an interest rate of 3% per year compounded weekly, what is the amount of the subsidy?
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