The present worth of the full-sized pipeline is determined to be what and that of the small-sized pipeline is what Which pipeline is the most economical pipeline
In order to provide drinking water as part of its 50-year plan, a west coast city is considering constructing a pipeline for importing water from a nearby community that has a plentiful supply of brackish ground water. A full-sized pipeline can be constructed at a cost of $125 million now. Alternatively, a smaller pipeline can be constructed now for $85 million and enlarged 20 years from now for another $90 million. The pumping cost will be $25,000 per year higher for the smaller pipeline during the first 20 years, but it will be approximately the same thereafter. Both pipelines are expected to have the same useful life with no salvage value
At an interest rate of 11% per year
The present worth of the full-sized pipeline is determined to be what and that of the small-sized pipeline is what
Which pipeline is the most economical pipeline
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