How often should the pump be replaced

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Reference no: EM131994447

A water pump to be used by the city’s maintenance department costs $10 000 new. A running-in period, costing $1000 immediately, is required for a new pump. Operating and maintenance costs average $600 the first year, increasing by $200 per year thereafter. The salvage value of the pump at any time can be estimated by the declining balance rate of 15 percent. Interest is at 10 percent. Calculate the EAC for replacing the pump after one year, two years, etc. How often should the pump be replaced?

Reference no: EM131994447

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