Respuesta :
Answer:
Yes
Explanation:
According to the scenario, computation of the given data are as follow:-
We can calculate the annual equivalent cost by using following formula:-
Annual Equivalent Cost (AEC) = Initial Cost × [Interest Rate × (1 + Interest Rate)^Number of years ÷ (1 + Interest Rate)^Number of years - 1} + Annual Cost Per Year
= $100,000 × [0.06 × (1 + 0.06)^25 ÷ (1 + 0.06)^25 - 1] + $10,000
= $100,000 × [0.06 × 4.291871 ÷ 4.291871 - 1] + $10,000
= $100,000 × [0.2575123 ÷ 3.291871] + $10,000
= $100,000 × 0.07823 + $10,000
= $7,823 + $10,000
= $17,823
According to the analysis, the annual cost of new pipeline $17,823 is less than 40,000. So the new pipeline should built.
