Initial cost
of $140,000 for purchase and installation of a sealed pumping unit that is guaranteed to
be maintenance free for 10 years. After 10 years the pumping station would have to
be replaced. Here we have two
different periods of comparison so to make them an
equal of 20 years the pump in alternative C must be replaced after 10 years.
P =
$140,000 + $140,000 (0.463)
= $140,000 + $ 64,820
= $204,820
So alternative C is cheaper than alternative A by $218,180 -
$204,820 = $13,360.