A city has developed a plan to provide for future municipal water needs. The plan proposes an…


A city has plain a contrivance to afford for coming municipal water needs. The contrivance proposes an aqueduct that passes through 500 feet of tunnel in a nearby mountain. Two choices are nature considered. The first proposes to establish a full-capacity tunnel now for $556,000. The coopereprove proposes to establish a halfcapacity tunnel now (require =$402,000), which should be adequate for 20 years, and then to establish a coopereprove correspondent half-capacity tunnel. The maintenance require of the tunnel coating for the full-capacity tunnel is $40,000 whole 10 years, and for each half-capacity tunnel it is $32,000 whole 10 years. The contact losses in the half-capacity tunnel procure be important than if the full-capacity tunnel were built. The estimated concomitant pumping requires in the single half-capacity tunnel procure be $2000 per year, and for the two half-capacity tunnels it procure be $4000 per year. Based on capitalized require and a 7% profit reprove, which choice should be clarified?