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The town of Dry Gulch needs more water from Pine Creek. The town engineer has selected two plans for comparison: a gravity plan (divert water
The town of Dry Gulch needs more water from Pine Creek. The town engineer has selected two plans for comparison: a gravity plan (divert water at a point 10 miles up Pine Creek and pipe it by gravity to the town) and a pumping plan (divert water at a point closer to town). The pumping plant would be built in two stages, with half-capacity installed initially and the other half installed 10 years later. The analysis will assume a 40-year life, 10% interest, and no salvage value. Use an annual cash flow analysis to find which plan is more economical. The EUAC of the gravity option is (round to 3 significant figures, enter numbers only). The EUAC of the pumping option is (round to 3 significant figures, enter number only). The more economical plan is (enter gravity or pumping) Two investment opportunities are as shown in the following table. At the end of 10 years, Alternative B is not replaced. Thus, the comparison is 15 years of A versus 10 years of B. If the MARR is 12%, which alternative should be selected? The incremental rate of return is (express as a percentage to one decimal place) The alternative to select is (type A or B)
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