Two installations are being considered to provide for water storage in a chemical plant. A tank on a tower or a tank of equal capacity placed on a hill some distance from the plant. The cost of installing the tank and tower is estimated at P350,000. The cost of installing the tank on the hill, including the extra length of service lines, is estimated at P300,000. The hill installation will require an additional investment of P30,000 in pumping equipment whose
Two installations are being considered to provide for water storage in a chemical plant. A
tank on a tower or a tank of equal capacity placed on a hill some distance from the plant. The
cost of installing the tank and tower is estimated at P350,000. The cost of installing the tank on
the hill, including the extra length of service lines, is estimated at P300,000. The hill installation will
require an additional investment of P30,000 in pumping equipment whose life is estimated to be
15 years with a salvage value of P2,500. The life of the two installations is estimated to be 30
years. Annual cost of labor, electricity, and maintenance incident to the pumping equipment is
estimated at P3,000. Taxes and insurance for both are 2.5% of the first cost. Money is worth 18%
effective. Which alternative should be used? (USE PW and EUAC)
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