A pump station has an initial cost of $47,000. Other costs are: 1. Pumps: $9000 2. Control

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Question:

A pump station has an initial cost of $47,000. Other costs are:

1. Pumps: $9000

2. Control panel: $4000

3. Annual maintenance: $550

4. Salvage value: $10,000

5. Discount rate: 8%

Pump life is 10 years, control panel life is 20 years. Calculate the present worth PW of the pump station after 20 years. [Annualize the operating costs for 20 years ($5400). Calculate the cost of pump replacement after 10 years. ($4170). Calculate the value of salvage. (-$2145). PW = the sum.]