300 in operating expense for e pump an be lized and the esti

300 in operating expense for e pump an be lized and the estimated life of the pump can be doubled to 24 years The salvage (marke vlue of aither atermative is negible at any timethe MARR7% oa fo oon to-the rtnet and tuble for doretocompoundng when ,.7%per yer The maximum espenditure for thela qupment is Round to the nearest hundreds)

Solution

The maximum expenditure for auxiliary equipment is the present worth (PW) of future benefits.

PW ($) = 300 x P/A(7%, 24) = 300 x 11.4693** = 3,441 ~ 3,400 (Rounded to nearest hundreds)

**From P/A factor table