Question
An engineer is considering the size of a reservoir for flood control in the northern part of Germany. The size of the reservoir is closely
An engineer is considering the size of a reservoir for flood control in the northern part of Germany. The size of the reservoir is closely related to the annual rainfall. In addition, there will be reparation costs from damages when the amount of rainfall exceeds the design capacity. If such damage occurs, it is estimated that the annual reparation cost will be 2.5% of the capital investment. The probabilities of specific amounts of rainfall per year and the estimated investment costs of the reservoir are given below. Using an interest rate of 10% per year and a study period of 11 years, determine the appropriate investment based on AW.
Annual Rainfall, M3 | Probability of Greater Rainfall | Estimated Capital Investment |
110 | 0.6 | 2,500,000 |
120 | 0.2 | 2,550,000 |
130 | 0.1 | 2,600,000 |
140 | 0.055 | 2,650,000 |
150 | 0.045 | 2,700,000 |
What is the AW (Annual Worth) for annual rainfall 110?
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