(Solved): The city of Metropolita added a new subway station in a neighborhood between two existing stations. ...

The city of Metropolita added a new subway station in a neighborhood between two existing stations. After the station was built, the average house price increased by $\$10,000$ and the average commute time fell by 15 minutes per day. Suppose that there is one commuter per household, that the average commuter works 5 days a week, 50 weeks a year, and that the benefits of reduced commuting time apply to current and future residents forever. Assume an interest rate of $5\%$. Each household represents minutes per year of difference in commute time leaving time for more work time and, thus, earning additional income. If $\mathrm{V}$ is the value of a minute, then $\mathrm{V}?3750$ is the annual value per household of the extra work. The present discounted value of that extra work time $(V?3750)$ in perpetuity (forever) is $V?3750/$ The increase in the average house price indicates that $\$10,000$ is the total value of that time. Setting the present discounted value equal to 10,000 and solving for $V$ gives a value per minute of or a value per hour of