Answered step by step
Verified Expert Solution
Question
1 Approved Answer
show steps plz and don't use excel Problem (8): The city is considering building an irrigation system from a water supply. They want to build
show steps plz and don't use excel
Problem (8): The city is considering building an irrigation system from a water supply. They want to build a concrete reservoir with a steel pipe system. The first cost would be $ 240,000 with annual maintenance costs of $ 5,000. The city is expecting the irrigation system will bring $ 35,000 per year in additional revenues due to better crop production. The real dollar interest rate is 8% and they anticipate inflation to be 6% per year. Assume that the reservoir will have a 20-year life. a) Using PW method, Should the city invest? Problem (9): A regional infrastructure building and maintenance contractor must decide to buy a new compact horizontal directional drilling (HDD) machine now, or wait and buy it 2 years from now when a large pipeline contract will require the new equipment. The cost of the system is $68,000 if purchased now or an estimated $81,000 if purchased 2 years from now. Annual Interest rate is 10% today, and inflation is expected to be 5% this year, and 7% the following year, determine if the contractor should invest now or later (Use PW analysis using two approaches)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