A municipal power plant uses natural gas from an existing pipeline at an annual cost of $40,000 per year. A new pipeline would initially cost $100,000, but it would reduce the annual cost to $10,000 per year. (a) Assume an analysis period of 25 years and no salvage value for either pipeline. The interest rate is 6%. Using the equivalent uniform annual cost (EUAC), should the new pipeline be built? (b) The power plant uses natural gas. What are some of the noneconomic benefits to the municipality of this energy source over others? Develop three primary advantages and disadvantages.

ENGR.ECONOMIC ANALYSIS
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Chapter1: Making Economics Decisions
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A municipal power plant uses natural gas from an existing pipeline at an annual cost of $40,000 per year. A new pipeline would initially cost $100,000, but it would reduce the annual cost to $10,000 per year. (a) Assume an analysis period of 25 years and no salvage value for either pipeline. The interest rate is 6%. Using the equivalent uniform annual cost (EUAC), should the new pipeline be built? (b) The power plant uses natural gas. What are some of the noneconomic benefits to the municipality of this energy source over others? Develop three primary advantages and disadvantages.

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