Question: 25. Two alternate plans are available for increasing the capacity of existing water transmission lines between an unlimited source and a reservoir. The unlimited source

 25. Two alternate plans are available for increasing the capacity of

25. Two alternate plans are available for increasing the capacity of existing water transmission lines between an unlimited source and a reservoir. The unlimited source is at a higher elevation than the reservoir. Plan A calls for the construction of a parallel pipeline and for flow by gravity. Plan B specifies construction of a booster pumping station. Estimated cost data for the two plans are as follows: (worth 15 points) Plan A Plan B Pipeline Pumping Station $200,000 Construction Cost (initial cost) $1.000.000 Life 40 years 40 years (structure) 20 years (equipment) $75,000 Cost of replacing equipment at the end of 20 years S1000/year $50,000/year Operating cost Which plan is more economical, assuming an interest rate of 12%. (Assume annual compounding, zero salvage value, and all other costs equal for both plans.) plan B

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