Question 3 A new township requires a water supply system to be installed. Water needs to be provided to this new development by a pipeline for which a choice between two types of pipe systems must be made. The following data is available for both Type A and Type B. Type A Initial capital cost of pipeline R200 000 Pump equipment cost R60 000 Annual energy cost R 10 500 Increase in annual energy cost R 82 Estimated life: Pipeline 50 Years Pump equipment 25 Years Type B R 120 000 R75 000 R 9 500 R 82 75 Years 25 Years An economic analysis over 100 years using the equivalent uniform annual cash flow method (EUACF) is required. Which of these pipes is the most economical? (20) Assume: 1. Take the rate of return of 8% p.a. 2. Zero salvage values for both the pump installation and pipelines at the end of the lives given and renewal/replacement cost to be equal to the initial costs given