The Cebu City plans to increase the capacity of her existing water transmission lines. Two plans are under consideration. Plan A requires the construction of a parallel pipeline, the flow being maintained by gravity. The initial cost is P197342811 and the life is 40 years, with an annual operating cost of P8450154 for the 1st 20 years and P13297046 for the next 20 years. Plan B requires the construction of a booster pumping station costing P100M with the life of 40 years. The pumping equipment cost an additional amount of P25M, it has a life of 20 years and a salvage value of P2M. The annual operating cost is P5M. Using the Present Value (PV) Method and an interest of 21% cpd. annually, what is the PV CDI

ENGR.ECONOMIC ANALYSIS
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The Cebu City plans to increase the capacity of her existing water transmission lines. Two plans are under consideration.
Plan A requires the construction of a parallel pipeline, the flow being maintained by gravity. The initial cost is
P197342811 and the life is 40 years, with an annual operating cost of P8450154 for the 1st 20 years and P13297046 for
the next 20 years. Plan B requires the construction of a booster pumping station costing P100M with the life of 40 years.
The pumping equipment cost an additional amount of P25M, it has a life of 20 years and a salvage value of P2M. The
annual operating cost is P5M. Using the Present Value (PV) Method and an interest of 21% cpd. annually, what is the PV
of Plan A?
Transcribed Image Text:The Cebu City plans to increase the capacity of her existing water transmission lines. Two plans are under consideration. Plan A requires the construction of a parallel pipeline, the flow being maintained by gravity. The initial cost is P197342811 and the life is 40 years, with an annual operating cost of P8450154 for the 1st 20 years and P13297046 for the next 20 years. Plan B requires the construction of a booster pumping station costing P100M with the life of 40 years. The pumping equipment cost an additional amount of P25M, it has a life of 20 years and a salvage value of P2M. The annual operating cost is P5M. Using the Present Value (PV) Method and an interest of 21% cpd. annually, what is the PV of Plan A?
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