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The Water holding company is considering replacing old networks of pipelines in three different residential zones to reduce the number of pipe breaks and the associated costs, and to increase the hydraulic capacity in terms of volume of water. However, the current available budget is limited, so the company has to choose one zone to execute. The company is willing to raise the tariff of water meter to compensate the associated costs. The company's annual MARR is 6%. Zone Z 30 1.5 million Zone Y 15 1.5 million 25 20,000 1.2 20 40 20,000 Network zone Zone X Network length (Km) 20 Replacement Cost (EGP) per Km 1.5 million Reduction in no. of breaks per year Cost of repair per break 20,000 The increase in water meter tariff (EGP per m' 1.8 of water) Estimated increase in volume of potable water 600,000 (m per year) Reduced number of service interruptions for 15 the consumer (water cut off) per year Monetary Value of each service interruption per household Number of households 1200 Estimated life (years) 500,000 700,000 10 15 150 80 200 800 1400 20 20 20 1. Preparing for a Benefit-Cost Analysis, answer the following questions: a) What is the annual worth of Net Costs for zones X, Y, & Z? b) What is the annual worth of Net Benefits for zones X, Y, & Z? c) What is the BC ratio for each zone X, Y,& Z, based on AW calculations? 2. Using BC incremental comparison, which zone is the best alternative? The Water holding company is considering replacing old networks of pipelines in three different residential zones to reduce the number of pipe breaks and the associated costs, and to increase the hydraulic capacity in terms of volume of water. However, the current available budget is limited, so the company has to choose one zone to execute. The company is willing to raise the tariff of water meter to compensate the associated costs. The company's annual MARR is 6%. Zone Z 30 1.5 million Zone Y 15 1.5 million 25 20,000 1.2 20 40 20,000 Network zone Zone X Network length (Km) 20 Replacement Cost (EGP) per Km 1.5 million Reduction in no. of breaks per year Cost of repair per break 20,000 The increase in water meter tariff (EGP per m' 1.8 of water) Estimated increase in volume of potable water 600,000 (m per year) Reduced number of service interruptions for 15 the consumer (water cut off) per year Monetary Value of each service interruption per household Number of households 1200 Estimated life (years) 500,000 700,000 10 15 150 80 200 800 1400 20 20 20 1. Preparing for a Benefit-Cost Analysis, answer the following questions: a) What is the annual worth of Net Costs for zones X, Y, & Z? b) What is the annual worth of Net Benefits for zones X, Y, & Z? c) What is the BC ratio for each zone X, Y,& Z, based on AW calculations? 2. Using BC incremental comparison, which zone is the best alternative
