Question

you are at a forward location and need to provide a sanitary sewage utility for the site. you have two options:

a. install holding tanks at a total cost of \\$60,000 and have them pumped every two weeks at a total cost of \\$320 per service (that is, 26 services per year). note: while you can imagine that each subsequent year, the negotiated cost may increase due to inflation, using real interest rates that account for inflation will negate that effect. thus you can use the service cost above across the entire life of the installation - a constant dollar cost.

b. install a septic system with a leach field at a total cost of \\$156,000. there will be no annual recurring service cost, although you need to pump the septic tank every 5 years to keep the leach field clear. (cost of each pumping service will be \\$6300 in constant dollars). we will not consider a pumping service at year 15 when the mission ends - only consider years 5 and 10!

your best information is that the sites mission will be an enduring mission for 15 years. at that point you can presume the site will be sold, abandoned, mothballed, or demolished and thus you may ignore any costs associated with the disposition of the site. (e.g. the septic system or holding tanks have no salvage value for the purposes of this analysis, nor will you pump the septic system the last year. so we will determine the best option for providing the sewage utility based solely on economics.

step 1: what is the term of analysis? note: enter your answer only using numbers such as \1,234.56.\ do not use any characters (e.g. \\$, %, or years). likewise, do use commas to discriminate thousands and millions, and do use periods as decimal points. (us standard)

Explanation:

Identify the term of analysis from the problem description

$$ \text{Term of Analysis} = 15 $$

Answer:

Step 1: What is the term of analysis? <blank>15</blank>