ACME Consulting Engineering company has been engaged to advise Ipoh City Council (Majlis Bandaraya Ipoh) how best to proceed with the construction of a 200,000 m water supply reservoir for the coming 60 years. Since only 120,000 m of storage will be required for the next 35 years, an alternative proposal to building the full capacity now is to build the reservoir in two stages. Initially, the reservoir could be built with 120,000 m3 of capacity and then, 35 years hence, the additional 80,000 m3 of capacity could be added by increasing the height of the reservoir, where additional pump should be added to the pumping system to support the first stage pump. Estimated costs of the construction, maintenance, and pump installation costs and the pump salvage value are in Table Q3. The interest rate is 10 % per year. Construction Annual Pump Installation Cost Pump salvage value (EOL) Cost Maintenance Cost Full capacity now 200,000 m3 RM 33,500,000 RM 130,000 reservoir RM 588,000 12% of the installation cost In two stages RM 350,000 12% of the installation cost First stage: RM 17,900,000 RM 77,000 120,000 m3 Second stage: RM 14,500,000 RM 23,200 Add 80,000 m to reach the full capacity RM 220,000 20% of the installation cost a) Draw a cash flow diagram for both proposals. [15 marks] b) Determine the present worth PW of both proposals. [15 marks] c) Determine the annual worth AW of both proposals. (5 marks] Select the best proposal to be used by Ipoh City Council. [5 marks] e) Discuss the time value of money concept and how it affects your selection in part d. [10 marks] ACME Consulting Engineering company has been engaged to advise Ipoh City Council (Majlis Bandaraya Ipoh) how best to proceed with the construction of a 200,000 m water supply reservoir for the coming 60 years. Since only 120,000 m of storage will be required for the next 35 years, an alternative proposal to building the full capacity now is to build the reservoir in two stages. Initially, the reservoir could be built with 120,000 m3 of capacity and then, 35 years hence, the additional 80,000 m3 of capacity could be added by increasing the height of the reservoir, where additional pump should be added to the pumping system to support the first stage pump. Estimated costs of the construction, maintenance, and pump installation costs and the pump salvage value are in Table Q3. The interest rate is 10 % per year. Construction Annual Pump Installation Cost Pump salvage value (EOL) Cost Maintenance Cost Full capacity now 200,000 m3 RM 33,500,000 RM 130,000 reservoir RM 588,000 12% of the installation cost In two stages RM 350,000 12% of the installation cost First stage: RM 17,900,000 RM 77,000 120,000 m3 Second stage: RM 14,500,000 RM 23,200 Add 80,000 m to reach the full capacity RM 220,000 20% of the installation cost a) Draw a cash flow diagram for both proposals. [15 marks] b) Determine the present worth PW of both proposals. [15 marks] c) Determine the annual worth AW of both proposals. (5 marks] Select the best proposal to be used by Ipoh City Council. [5 marks] e) Discuss the time value of money concept and how it affects your selection in part d. [10 marks]