A public works project will supply water to a city forever. The question that you must answer is whether or not to build a half-capacity system now and a future half-capacity system in 30 years. The alternative would be to build an over-designed system now (full- capacity), which will require no future capital investment. The time value of money is 11%, which alternative is best? Use Present Worth Analysis. Half-Capacity $905,000 Full-Capacity $950,000 17,500 25,000 First cost First Channel Lining at the end of 10 years and every 15 years thereafter Annual Expenses First Channel Pump Equipment Pumping Costs O&M Second Investment at end of 30 years Second Channel Lining at the end of 40 years and every 15 years thereafter Annual Expenses Second Channel Pump Equipment Pumping Costs O&M 2,500 1,500 2,000 1,250,000 (Second Channel) 5,000 20,000 3,000 2,000 3,000 i = 11% Values in $103 Forever = Perpetual: A = Pi A public works project will supply water to a city forever. The question that you must answer is whether or not to build a half-capacity system now and a future half-capacity system in 30 years. The alternative would be to build an over-designed system now (full- capacity), which will require no future capital investment. The time value of money is 11%, which alternative is best? Use Present Worth Analysis. Half-Capacity $905,000 Full-Capacity $950,000 17,500 25,000 First cost First Channel Lining at the end of 10 years and every 15 years thereafter Annual Expenses First Channel Pump Equipment Pumping Costs O&M Second Investment at end of 30 years Second Channel Lining at the end of 40 years and every 15 years thereafter Annual Expenses Second Channel Pump Equipment Pumping Costs O&M 2,500 1,500 2,000 1,250,000 (Second Channel) 5,000 20,000 3,000 2,000 3,000 i = 11% Values in $103 Forever = Perpetual: A = Pi