Question
A water district needs an additional supply of water from a local reservoir. The engineer has selected two plans for comparison: (a) The Gravity plan,
A water district needs an additional supply of water from a local reservoir. The engineer has selected two plans for comparison: (a) The Gravity plan, where water is diverted at a point 15 miles up-river from the reservoir and carried to the water district by gravity through the pipeline; or (2) the Pumping plan, where water is diverted at a point nearer the district and pumped through three miles of pipeline. The pumping station can be built in two stages, part now and part twenty years later. Use a 50-year analysis period and 6% interest. Salvage values can be ignored. Use the conventional incremental benefit-cost ratio method to select the more economical plan.
Gravity | Pumping | |
Initial investment | $ 3,000,000 | $ 1,500,000 |
Investment in 20th year | 0 | $ 500,000 |
Annual M&O | $ 15,000 | $ 25,000 |
Average annual power cost | ||
First 20 years | 0 | $ 75,000 |
Next 30 years | 0 | $ 150,000 |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started