A pump has failed in a facility that will be completely repl

A pump has failed in a facility that will be completely replaced in 3 years. A new brass pump costing $6989 can be purchased and installed (it will list 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 $436 to reconfigure the used pump for the new use. The used pump could be sold (as is) for $4199. 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).

Solution

Cost of brass pump = $6989 Cost of used pump = 4199+436= 4635 It would be cheaper by $2354(6989-4635) to use stainless steel pump