4. Two large-scale conduits are under consideration by a large municipal utility district (MUD). The first involves construction of a steel pipeline at a cost of $225 million. Portions of the pipeline will have to be replaced every 40 years at a cost of $50 million. The pumping and other operating costs are expected to be $10 million per year. Alternatively, a gravity flow canal can be constructed at a cost of $350 million. The M&0 costs for the canal are expected to be $0.5 million per year. If both conduits are expected to last forever, which should be built at an interest rate of 4% per year? Show your hand calculations and solve this question in excel. Show your cash flows in excel

4. Two large-scale conduits are under consideration by a large municipal utility district (MUD). The first involves construction of a steel pipeline at a cost of $225 million. Portions of the pipeline will have to be replaced every 40 years at a cost of $50 million. The pumping and other operating costs are expected to be $10 million per year. Alternatively, a gravity flow canal can be constructed at a cost of $350 million. The M&0 costs for the canal are expected to be $0.5 million per year. If both conduits are expected to last forever, which should be built at an interest rate of 4% per year? Show your hand calculations and solve this question in excel. Show your cash flows in excel

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter14: Capital Structure Management In Practice

Section14.A: Breakeven Analysis

Problem 8P

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