The High ridge Water District needs an additional supply of water from Steep Creek. The engineer has selected two plans for comparison: Gravity plan: Divert water at a point 10 miles up Steep Creek and carry it through a pipeline by gravity to the district. Pumping plan: Divert water at a point near the district and pump it through 2 miles of pipeline to the district. The pumping plant can be built in two stages, with half-capacity installed initially and the other half 10 years later. Use a 4O-year analysis period and 8% interest.
Salvage values can be ignored. During the first 10 years, the average use of water will be less than during the remaining 30 years. Use the conventional benefit-cost ratio method to select the more economical plan.