Please show work.

3.48. Your first assignment as a production engineer is to determine whether you should replace an existing pump now or three years from now. Your boss has given you the following information: Project Life: 5 years $0 Salvage Value - 3 year remaining life Existing Pump: Operating costs are $16,000 per year. Initial Cost: $96,000 New Pump: Operating Costs would be $8,000 per year. CHOICE: Replace existing pump now with the new unit that is more efficient. Salvage value of the new pump if purchased now would be $14,000 at end of 5 years. OR: Replace existing pump after 3 years when it has worn out. The salvage value of the new pump at the end of the project would be $28,000 since it would have been in service for only 2 years. Assume all operating costs are paid at the middle of each year. The time value of money is 10% APR compounded annually. Hint: Draw a cash flow diagram for each option