Construction cost of a wastewater treatment plant is:C=1,300,000*Q^0.65, where Q is the capacity of the...
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Accounting
Construction cost of a wastewater treatment plant is:C=1,300,000*Q^0.65, where Q is the capacity of the plant in million gallons per day, MGD, and C is in dollars.
Demand for plant capacity increases linearly from zero today at 1 MGD per year.
Under the assumption of either 1 or 4 plant expansions (120 MGD or 45 MGD) will occur for the next 20 years, determine the break-even interest rate at which the cost of one expansion exactly equals that of four expansions.
Plot the break-even chart.
Which plant should the city choose should the interest rate be 6%?
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