Determine the size plant that the suburb should build today

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Reference no: EM131296491

Wastewater treatment plant expansion. A suburb with a population of 20.000 is beginning to undergo rapid housing development, and is experiencing failure of its current individual household septic tank disposal system. The suburb has decided to build a sewage treatment plant to meet its needs for the next 20 years. The cost of the plant de-pends on the hydraulic flow, which is directly related to the population served. The suburb estimates its population 20 years from now as shown below:

2138_Table 1.jpg

Estimates are obtained on the cost of a wastewater treatment plant built today to meet the needs of three possible population levels as shown below:

939_Table 2.jpg

It has been suggested. however. that money might be saved by building to a small capacity now and expanding the plant after ten years if population begins to exceed capacity at that time. Cost estimates, expressed in present value terms, are obtained for upgrading the size of the plant ten years from now. These are provided in a third table:

1460_Table 3.jpg

Determine the size plant that the suburb should build today. Draw and label the decision tree and state the optimal expected cost.

Reference no: EM131296491

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