A city's maintenance department is considering replacing an existing pump. The existing pump has a salvage value of $1000 and will retain this salvage value indefinitely. Operating costs are currently $2700 per year and rise by $550 per year. The cost for the new pump is $9 000. A running-in period, costing $1000 immediately, is required for a new pump. Operating and maintenance costs average $600 the first year, increasing by $350 per year thereafter. The salvage value of the pump at any time can be estimated by the declining balance rate of 20 percent. The interest rate is 10%. a) Calculate the economic life of the new pump. b) Should the current pump be replaced? When? Note: You can use a spreadsheet for this problem, however you should clearly show the general equations used to calculated the EAC values.