A city water and waste-water department has a four-year-old sludge pump that was initially purchased for $65,000. This pump can be kept in service for an additional four years, or it can be sold for $36,500 and replaced by a new pump. The purchase price of the replacement pump is $48,000. The projected MVs and operating and maintenance costs over the four-year planning horizon are shown in the table that follows. Assuming the MARR is 12%, (a) determine the economic life of the challenger and (b) determine when the defender should be replaced. 工業 Challenger MV at EOY Defender Year MV at EOY O&M Costs O&M Costs $42,000 34,500 27,000 $25,000 $17.500 $12000 21,500 18,000 14,500 2 20,500 15,000 23,500 18,000 4 26,500 19,500 21,000 Click the icon to view the interest and annuity table for discrete compounding when the MARR is 12% per year. a. The economic life of the challenger is year(s). (Round to the nearest whole number.)

A city water and waste-water department has a four-year-old sludge pump that was initially purchased for $65,000. This pump can be kept in service for an additional four years, or it can be sold for $36,500 and replaced by a new pump. The purchase price of the replacement pump is $48,000. The projected MVs and operating and maintenance costs over the four-year planning horizon are shown in the table that follows. Assuming the MARR is 12%, (a) determine the economic life of the challenger and (b) determine when the defender should be replaced. 工業 Challenger MV at EOY Defender Year MV at EOY O&M Costs O&M Costs $42,000 34,500 27,000 $25,000 $17.500 $12000 21,500 18,000 14,500 2 20,500 15,000 23,500 18,000 4 26,500 19,500 21,000 Click the icon to view the interest and annuity table for discrete compounding when the MARR is 12% per year. a. The economic life of the challenger is year(s). (Round to the nearest whole number.)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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