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help asap Two pumps are being considered for purchase for...

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Accounting

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Two pumps are being considered for purchase for a service life of 10 years. Interest rate is 5%. Apply the piesent worth fechnique, which pump should be comserear Solution: 1. Nesther input nor output is the same, calculate the net present worth (NPW) 2. NPW, - Initial cost: PW - Equivalent PW for salvage and replacement together: PW: - Cash flow at the end of 10 years, PW - Thus NPW1= 3. NPW2 : - Initial cost: PW - Equivalent PW for salvage and replocement together PW= - Cash flow at the end of 10 years. PW. - Thus NPW2= 4. Hence use

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