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6 - 1 2 . Two pumps are being considered for a certain service of 1 0 years. The Toltec pump has a first cost

6-12. Two pumps are being considered for a certain service of 10 years. The Toltec pump has a first cost of $8,000 and an estimated annual cost of $3,200 for electric energy used for pumping purposes. The Mandan pump has a first cost of $6,400. Because it is less efficient, its annual costs for pumping energy will be $340 higher than those of the Toltec pump/ Estimated annual income taxes will be $32 higher with the Toltec pump. It is anticipated that there will be no other cost differences an no salvage values. What is the prospective after-tax rate of return on the extra investment required to purchase the Toltec pump?

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