A city engineer must choose between two different routes for a new sewer line. Route 1 is a 20,000-foot gravity line, which includes 8000 feet of tunneling at $250 per foot. The remaining 12,000 feet will cost $80 per foot. The annual maintenance cost is expected to be $2000. Route 2 is a 23,000-foot line requiring a pumping station, which will cost $840K to build and $15K annually to operate and maintain. The sewer line costs $80 per foot and will cost $2100 annually to maintain. The expected life of the station and both lines is 35 years. Using an interest rate of 8%, which route should be chosen using: a. RORAI b. AWC

A city engineer must choose between two different routes for a new sewer line. Route 1 is a 20,000-foot gravity line, which includes 8000 feet of tunneling at $250 per foot. The remaining 12,000 feet will cost $80 per foot. The annual maintenance cost is expected to be $2000. Route 2 is a 23,000-foot line requiring a pumping station, which will cost $840K to build and $15K annually to operate and maintain. The sewer line costs $80 per foot and will cost $2100 annually to maintain. The expected life of the station and both lines is 35 years. Using an interest rate of 8%, which route should be chosen using: a. RORAI b. AWC

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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