Question 2 # Community X is planning to improve its Water and Sanitation infrastructure. Two alternative designs presented to the Community are shown in Table 2. In addition for Design A, the annual operating cost is R 850 000 throughout its life; for Design B, the annual operating cost is R 700 000 for the first 19 years and R800 000 for the remaining 6 years. The interest rate is 11 percent. Determine which design alternative is more economical by using Net Present Value method. Substantiate your conclusion with logic and calculation. Table 2: Data for Water & Sanitation project Design A Design B Cost (R) 20 000 000 30 000 000 Annual Revenue 1 000 000 1 200 000 (R) Salvage Value 2 000 000 3 000 000 (R) Design life 20 25 (years) Please state every assumption made. (1) Using Net Present Value analysis, determine which of the two design alternatives is a better option. (ii) Verify the decision made in (i) by comparing only the EUACF of the two design alternatives