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2. A proposed mill in an isolated area can be furnished with power and water by a gravity-feed system. A steam high above the mill
2. A proposed mill in an isolated area can be furnished with power and water by a gravity-feed system. A steam high above the mill will be tapped to provide flow for water needs and power requirements by connecting it to the mill with a ditch- and-tunnel system or with a wood-and-concrete flume that winds its way down from the plateau. Either alternative will meet current and future needs, and both will utilize the same power generating equipment. The ditch-and-tunnel system will cost $500,000 with annual maintenance of $2,000. The flume has an initial cost of $200,000 and yearly maintenance cost of $12,000. In addition, the wood portion of the flume will have to be replaced every 15 years at a cost of $100,000. Compare the alternatives on the basis of capitalized costs with an interest rate of 6% 2. A proposed mill in an isolated area can be furnished with power and water by a gravity-feed system. A steam high above the mill will be tapped to provide flow for water needs and power requirements by connecting it to the mill with a ditch- and-tunnel system or with a wood-and-concrete flume that winds its way down from the plateau. Either alternative will meet current and future needs, and both will utilize the same power generating equipment. The ditch-and-tunnel system will cost $500,000 with annual maintenance of $2,000. The flume has an initial cost of $200,000 and yearly maintenance cost of $12,000. In addition, the wood portion of the flume will have to be replaced every 15 years at a cost of $100,000. Compare the alternatives on the basis of capitalized costs with an interest rate of 6%
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