Groundwater wells are known to begin pumping sand once it becomes exploited (old), and thismay damage...

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Economics

Groundwater wells are known to begin pumping sand once it becomes exploited (old), and thismay damage the subsequent water treatment processes. To solve this problem, two alternatives areproposed:- A new well can be drilled at a capital cost of $385,000 with minimal operating andmaintenance expenses of $20,500 per year.- A settling tank can be constructed ahead of the treatment processes which will cost$190,000 to build and $32,100 per year to operate and maintain.The salvage value of either option at EOY 20 is 10% of the capital investment. Using a MARR of7%:(a) Which alternative is better for the 20-year study period (using the present worth method)?(b) Confirm the answer of (a) using the future worth method (state the future worth for eachof the alternatives and make a decision based on these values

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