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A city water and waste-water department has a four-year-old sludge pump that was initially purchased tor $65,000. This pump can be kept in service for
A city water and waste-water department has a four-year-old sludge pump that was initially purchased tor $65,000. This pump can be kept in service for an additional four years, or it can be sold for $35,000 and replaced by a new pump. The purchase price of the replacement pump is $50,000. The projected MVs and operating and maintenance costs over the four-year planning horizon are shown in the table that follows. Assuming the MARK is 10%, (a) determine the economic life of the challenger and (b) determine when the defender should be replaced. (9.5, 9.6)
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