An estimated 6 billion gallons of clean drinking water disappear each day across the United States due to aging, leaky pipes, and water mains before it gets to the consumer or industrial user. The American Society of Civil Engineers (ASCE) has teamed with municipalities, counties, and several excavation companies to develop robots that can travel through mains, detect leaks, and repair many of them immediately. Four proposals have been received for funding. There is a $100 million ($100 M) limit on capital funding and the MARR is established at 12% per year. (a) Use the IROR to rank and determine which of the four independent projects should be funded. (Solve by hand or spreadsheet as instructed.) (b) Determine the rate of return for the projects selected in part (a). (c) Determine the overall rate of return for the projects selected in part (a), assuming that excess funds are invested at the MARR. Is the overall return economically acceptable? First Estimated Annual Project Project Cost, $M Savings, $M per Year Life, Years W −12 5.0 3 X −25 7.3 4 Y −45 12.1 6 Z −60 9.0 8
An estimated 6 billion gallons of clean drinking
water disappear each day across the United States
due to aging, leaky pipes, and water mains before
it gets to the consumer or industrial user. The
American Society of Civil Engineers (ASCE)
has teamed with municipalities, counties, and
several excavation companies to develop robots
that can travel through mains, detect leaks, and
repair many of them immediately. Four proposals
have been received for funding. There is a
$100 million ($100 M) limit on capital funding
and the MARR is established at 12% per year.
(a) Use the IROR to rank and determine which of
the four independent projects should be funded.
(Solve by hand or spreadsheet as instructed.)
(b) Determine the
selected in part (a).
(c) Determine the overall rate of return for the
projects selected in part (a), assuming that
excess funds are invested at the MARR. Is
the overall return economically acceptable?
First Estimated Annual Project
Project Cost, $M Savings, $M per Year Life, Years
W −12 5.0 3
X −25 7.3 4
Y −45 12.1 6
Z −60 9.0 8
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