A new water line must be constructed from an existing pumping station to a reser

Question

A new water line must be constructed from an existing pumping station to a reservoir. Estimates of construction and pumping costs for each pipe size have been made:

Pipe Size

Estimated Construction Costs

Cost/hour of pumping

8

Pipe Size

Estimated Construction Costs

Cost/hour of pumping

8

A new water line must be constructed from an existing pumping station to a reservoir. Estimates of construction and pumping costs for each pipe size have been made: The annual cost is based on a 16-year life and a desired rate of return of 10%. Which is the most economical pipe size for pumping 4000 hr/year?

Explanation / Answer

Present cost of 8

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