Compare the equivalent annual costs for two pumps


Question: Compare the equivalent annual costs for 2 pumps. The minimum attractive rate of return is 12%.

First cost of PUMP A is $8000
First cost of PUMP B is $6000

Salvage of PUMP A is zero
Salvage of PUMP B is zero

Life span of PUMP A is 8 years
Life span of PUMP B is 8 years

Annual repair costs of PUMP A is $500
Annual repair costs of PUMP B is $800

Annual operating costs of PUMP A is $1500
Annual operating costs of PUMP B is $1800

Use equivalent annual cost method.

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Finance Basics: Compare the equivalent annual costs for two pumps
Reference No:- TGS01812681

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