Example 6.8 A new pipeline is to be installed. Alternative sizes considered are eight-, twelve- and sixteen-inch diameter. For eight inches, the construction cost is $20,000 and the annual OMR including pumping cost is $5,000. For twelve inches, the costs are $25,000 and $800. respectively, and for six inches, they are $40,000 and $200. What is the most economic size of pipeline if it is needed for ten years and there is no salvage value at the end of that time? The applicable discount rate is 10 percent