A PUMPER SYSTEM WITH AN ESL PROBLEM
1. The ESL is 13 years. Year 13 is predicted to require the 4th rebuild; the pump will not be used
beyond 13 years anyway.
2. Required MV = $1,420,983 found using Solver with F12 the target cell and B12 the
changing cell. This MV is well above the first cost of $800,000.
3. Solver yields the base AOC = $-201,983 in year 1 with increases of 15% per year.
The rebuild cost in year 4 (after 6000 hours) is $150,000. This AOC series is huge compared to the estimated AOC of $25,000 (years 1 – 4).
4. Compare the results in #2 and #3 with that in #1 and comment on them.
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