The town of Dry Gulch needs more water from PineCreek. The town engineer has selected two plans forcomparison: a gravity plan (divert water at a point10 miles up Pine Creek and pipe it by gravity to thetown) and a pumping plan (divert water at a pointcloser to town). The pumping plant would be built intwo stages, with half-capacity installed initially andthe other half installed 10 years later.The analysis will assume a 40-year life, 10%interest, and no salvage value. Use an annual cashow analysis to nd which plan is more economical.

	Gravity	Pumping
initial investment	$2,800,000.00	$1,400,000.00
investment in 10th year	none	$200,000
operation maintenance	10,000/yr	25,000/yr
avg. first 10 years	none	50,000/yr
avg. next 30 years	none	100,000/yr