$2$

$[14]$ A consulting engineer has been hired to advise a town on how best to proceed with the construction of a $200,000-m^3$ water supply reservoir. Since only $120,000m^3$ of storage will be required for the next $25$ years, an alternative to building the full capacity now is to build the reservoir in two stages. Initially, the reservoir could be built with $120,000m^3$ of capacity and then, $25$ years later, the additional $80,000m^3$ of capacity could be added by increasing the height of the reservoir. If interest is computed at $4\%,$ which construction plan is preferred?

Annual

$\backslash$table$[[,$Construction Cost,Maintenance Cost$],[$Build in two stages:,,$],[$First stage: $120,000-m^3$ reservoir,$$14,200,000,$$$75,000$