Question

The waste water department has a four year old pump that was initially purchased for $65,000. This existing pump can be kept in service for an additional four years, or it could be sold for S35,000 and replaced with a new pump. The purchase price of the new pump today is $50,000 The proiected MVs and Operating and Maintenance cost over the four vear planning period for both pumps are listed below Old Pump New Pump Year 2 4 MV $25,000 $21,000 $17,000 $13,000 O&M $18,000 $21,000 $23,000 S26,000 MV $40,000 $32,000 $24,000 $16,000 O&M $13,000 $15,500 $18,000 $20,500 The MARR of 10% is used a. Determine the Economic life of the new pump

b. Determine when the old pump should be replaced ?