Determine when the defender should be replaced

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 $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 MARR is 10%, (a) determine the economic life of the challenger and (b) determine when the defender should be replaced. Defender Year MV at EOY O&M Costs 1 $25,000 $18,500 21,000 21,000 17,000 23,500 13,000 26.000 Click the icon to view the interest and annuity table for discrete compounding when the MARR is 10% per year. Challenger MV at EOY O&M Costs $40,000 $13000 32,000 15,500 24,000 18,000 16,000 20,500 5 a. The economic life of the challenger is 4 year(s). (Round to the nearest whole number.)