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 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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