Municipal Engineer wants to evaluate three alternatives for supplementing the water supply. 1st alternative – continue deep well pumping at an annual cost of $10,500 2nd alternative – install a 10” pipeline from a surface reservoir. First cost is $25,000 and annual pumping cost is $7,000 3rd alternative – install a 20” pipeline from the reservoir. First cost of $34,000 and annual pumping cost of $5,000. Life of all alternatives is 20 years. For the second and third alternatives, salvage value is 10% of first cost. With interest at 8%, which alternative should the engineer recommend? Use present worth analysis PW (deepwell) = ? PW (10”pipeline) = ? PW (20”pipeline) = ?
Municipal Engineer wants to evaluate three alternatives for supplementing the water supply. 1st alternative – continue deep well pumping at an annual cost of $10,500 2nd alternative – install a 10” pipeline from a surface reservoir. First cost is $25,000 and annual pumping cost is $7,000 3rd alternative – install a 20” pipeline from the reservoir. First cost of $34,000 and annual pumping cost of $5,000. Life of all alternatives is 20 years. For the second and third alternatives, salvage value is 10% of first cost. With interest at 8%, which alternative should the engineer recommend? Use present worth analysis PW (deepwell) = ? PW (10”pipeline) = ? PW (20”pipeline) = ?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Municipal Engineer wants to evaluate three alternatives for supplementing the water supply.
1st alternative – continue deep well pumping at an annual cost of $10,500
2nd alternative – install a 10” pipeline from a surface reservoir. First cost is $25,000 and annual pumping cost is $7,000
3rd alternative – install a 20” pipeline from the reservoir. First cost of $34,000 and annual pumping cost of $5,000.
Life of all alternatives is 20 years. For the second and third alternatives, salvage value is 10% of first cost. With interest at 8%, which alternative should the engineer recommend? Use present worth analysis
PW (deepwell) = ?
PW (10”pipeline) = ?
PW (20”pipeline) = ?
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