municipal water authority is considering the installation of a new water system. Two options are being considered. The first option is a steel pipeline with an installation cost of $225 million. Annual maintenance and pumping costs begin at $15 million and increase by $1.0 million per year. The second option is a gravity fed concrete canal with an installation cost of $400 million. Annual maintenance costs begin at $0.5 million and increase by $0.4 million per year. The water system is expected to last 100 years and the interest rate is 5% per year compounded yearly. What is the present worth of the first option? Report your answer in millions of dollars. For the previous problem, what is the present worth of the second option? Report your answer in millions of dollars.

Answer rating: 100% (QA)

Option1Steel Pipeline Million Year Cash Out Flows DF 5 Present Value 0 225 100000 22500 1 15 095238 ... View the full answer