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A hydroelectric plant manager needs to choose between two different pipe materials. The first option, the steel pipe, costs $150,000 to purchase and install. The
A hydroelectric plant manager needs to choose between two different pipe materials. The first option, the steel pipe, costs $150,000 to purchase and install. The annual maintenance costs associated with the steel pipe-including painting and leak patching-is $10,000. The second option, the plastic pipe, costs $180,000 to purchase and install. The annual maintenance costs associated with the plastic pipe-including leak patching-is $5,000. Assuming both option A and option B have the same expected life of 25 years, and the firm's MARR is 6%, determine the net present value of both options and select the better (from an economic perspective) option
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