A pump has failed in a facility that will be completely replaced in 3 years. A brass pump costing $6000 installed will last 3 years. However, a used stainless steel pump that should last 3 more years has been sitting in the maintenance shop for a year. The pump cost $13,000 new. The accountants say the pump is worth $7000 now. The maintenance supervisor says that it will cost an extra $500 to reconfigure the pump for the new use and that he could sell it used (as is) for $4000. (a) What is the book cost of the stainless steel pump?
(b) What is the opportunity cost of the stainless steel pump?
(c) How much cheaper or more expensive would it be to use the stainless steel pump rather than a new brass pump?
a. $1500 cheaper
b. $1500 more expensive
c. $7500 cheaper
d. $7500 more expensive

A. $7,000

B. $4,000

Explanation:

(a) Based on the information given the book cost of the stainless steel pump will be $7,000 reason been that we were told that the pump is worth the amount of $7,000 now.

(B) Based on the information given the opportunity cost of the stainless steel pump will be $4,000 reason been that we were told that the pump future Salvage worth in which the pump could likely be sold is $4,000

(c) Calculation for How much cheaper or more expensive would it be to use the stainless steel pump rather than a new brass pump

Based on the information given to make use of a new brass pump will cost the amount of $6,000 and in a situation where the stainless steel pump is been use the total value will be the pump present value of the amount of $7,000 in addition with the value to reconfigure the pump of the amount of $500 which indicate that the stainless steel pump is more expensive Calculated as:

More expensive=($7,000+$500)-$6,000

More expensive=$7,500-$6,000

More expensive=$1,500

Therefore the stainless steel pump is MORE EXPENSIVE with the amount of $ 1500 more expensive than the new brass pump.

answer; (a) conduct a worksite inspection;