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10. A city government must replace its aging sewage treatment plant. There are two designs being considered. Design A has an initial outlay of $2.5M
10. A city government must replace its aging sewage treatment plant. There are two designs being considered. Design A has an initial outlay of $2.5M and will require $80,000 in annual operating and maintenance costs. Design B will require an initial outlay of $4.0M and will require $120,000 in annual operating and mainteance cost, however, Design B can be shared with an adjacent community that will increase revenues for the city by $80,000 per year. Use incremental profitability analysis to determine which design is the best alternative given an interest rate of 6%, a 15 year project life, and no salvage value. [5 points] Indicate A or B
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