Question

Question 5 20 pts A pump has failed in a facility that will be completely replaced in 3 years. A new brass pump costing $7388 can be purchased and installed (it will last 3 years). However, a used stainless steel pump that should last 3 more years has been sitting in the maintenance shop for a year. This used pump costed $13,000 when it was purchased (new). The accountants say this used pump is worth $7000 now. The maintenance supervisor says that it will cost an extra $471 to reconfigure the used pump for the new use. The used pump could be sold (as is) for $4031. How much cheaper or more expensive would it be to use the stainless steel pump rather than a new brass pump (Hint: it is assumed that stainless steel pump will be sold if it is not installed)? Margin of error: +/-5 (answers within range [x-5, x+5], where x is the true answer, are considered correct)

Answer 1

cost of new brass pump		7388
less selling price of old pump		4031
differential cost to be paid for new pump	7388 - 4031	3357
cost to be paid if old pump if used		471
saving on use of old pump	3357 - 471	2886
old pump Is cheaper than the new pump by		2886