QUESTION 4 A town needs more water from a local creek. The town engineer has selected two plans for comparison: a gravity plan (which will pipe the water to the town) and a pumping plan (which will pump the water to the town). The pumping plant will be built in two stages, with half the capacity installed initially and the other half installed in 10 years. The analysis will assume a 40-year life, 10% interest, and no salvage value. Use an annual cash flow analysis to determine the annual cost and select the most economical plan using the following data: Gravity Pumping Initial Investment $3,000,000 $1,500,000 Investment in 10th year none $ 200,000 Operation & Maintenance $ 8,000/yr $ 24,000/y Power Cost Average first 10 years $ 50,000/yr Average next 30 years $100,000/yr a. $ 314,900 Gravity plan b. $ 314,900 Pumping plan c. $ 253,925 Gravity plan d. $ 253,295 Pumping plan none none