Problem
Jenny McCarthy is an engineer for a municipal power plant. The plant uses natural gas, which is currently provided from an existing pipeline at an annual cost of $10,000 per year. Jenny is considering a project to construct a new pipeline. The initial cost of the new pipeline would be $35,000, but it would reduce the annual cost to $5000 per year. Assume an analysis period of 20 years and no salvage value for either the existing or new pipeline. The interest rate is 6%.
(a) Determine the equivalent uniform annual cost (EUAC) for the new pipeline.
(b) Should the new pipeline be built?
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.