A water district is considering the expansion of its water treatment plant. The initial construction cost $2250000. Additional monthly operating and maintenance expenses will be $8500. Revenue from monthly water sales is expected to be $190000 per month. In year 6, a $750000 refurbishment will need to be performed. Salvage is estimated to be 10% of the initial construction cost after 30 years.
a) Draw a cash flow diagram
b) Is the expansion economically viable if an MARR of 12% (APR) is assumed? Base the decision on a PW analysis.
c) State the decision criteria for the answer in PArt b.
d) If the expansion project is economically viable, what is the expected net monthly revenue?