A public water utility is trying to decide between two different sizes of pipe for a new
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A public water utility is trying to decide between two different sizes of pipe for a new water main. A 250-mm line will have an initial cost of $155,000, whereas a 300-mm line will cost $210,000. Since there is more head loss through the 250-mm pipe, the pumping cost is expected to be $3000 more per year than for the 250-mm line. If the lines are expected to last for 30 years, which size should be selected on the basis of a present worth analysis using an interest rate of 10% per year?
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Method 1 250 mm pipe Method 2 300mm pipe Actual cash flow Present value of cash ...View the full answer
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Niket Joshi
Being part of the banking industry, which is based on the principles of risk management, accountancy and finance, I have had the opportunity to interact with many customers on daily basis and help them understand various aspects related to these areas. I have taught many clients on features of loan/mortgage and deposit, including application of interest in these accounts, effects of compounding, regular cash flow analysis. While explaining a concept to someone I try to put myself in their shoes and understand their knowledge and skills before teaching them.
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