Year Demand Year Demand Year Demand 0 100 7 124 14 156 1 104 8 132 15 160 2 108 9 136 16 164 3 112 10 140 17 168 4 116 11 144 18 172 5 120 12 148 19 176 6 124 13 148 20 180

Need alternative 2 and 3

Several years ago, River City built a water purification plant to remove toxins and filter the city's drinking water. Because of population growth, the demand for water next year will be more than the plant's capacity of 100 million gallons per year. Therefore, the city must expand the facility. The estimated demand over the next 20 years is given in table given below. Click the icon to view the table. The city planning commission is considering three alternatives. > Alternative 1: Expand enough at the end of year 0 to last 20 years, which means an 80 million gallon increase (180 100). > Alternative 2: Expand at the end of year 0 and at the end of year 10. > Alternative 3: Expand at the end of years 0, 5, 10, and 15. Each alternative would provide the needed 180 million gallons per year at the end of 20 years, when the value of the plant would be the same regardless of the alternative chosen. Significant economies of scale can be achieved in construction costs: A 20 million gallon expansion would cost $22 million; a 40 million gallon expansion, $39 million; and an 80 million gallon expansion, only $59 million. The level of future interest rates is uncertain, leading to uncertainty about the hurdle rate. The city believes that it could be as low as 12 percent and as high as 18 percent. a. Compute the cash flows for each alternative, compared to a base case of doing nothing. (Note: As a municipal utility, the operation pays no taxes.) For alternative 1, the total cash flow over 20 years is $ 59 million. (Enter your response as an integer.) For alternative 2, the total cash flow over 20 years is $ million. (Enter your response as an integer.)