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A water supply cooperative plans to increase its water supply by 8.5 million gallons per day to meet increasing demand. One alternative is to spend
A water supply cooperative plans to increase its water supply by 8.5 million gallons per day to meet increasing demand. One alternative is to spend $10 million to increase the size of an existing reservoir in an environmentally acceptable way. Added annual upkeep will be $25,000 for this option. A second option is to drill new wells and provide added pipelines for transportation to treatment facilities at an initial cost $1.5 million and annual cost of $120,000. The reservoir is expected to last indefinitely, but the productive well life is only 10 years. Compare the alternatives at 5% per year
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