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