R2

You need to run a stainless steel pipe and the diameter of the pipe affects the operating costs of the pump and the installation costs of the pipe. Determine the optimum diameter based on the following:

Installation and material costs of the pipe go up with diameter (d, in inches) according to the relationship $4250*d.

After its 20 year life, the salvage value of the pipe with be $900*d.

As the diameter gets larger, it reduces the friction and the annual energy costs of the pump according to the relationship $1300/d.

The pipe has a 20 year lifetime and interest is estimated at 7% over that lifetime.

The capital costs of this pipe will vary based on the diameter of the pipe. Which of the following shows the correct relationship for the capital costs?