The Townof Sustainability is planning to rehabilitate the fountain of youth. The fountain has a pump that needs to be replaced or refurbished.

Option A:

Replace the pump with a new pump at a cost of $14,500. In years 7 and 14 the pump needs maintenance at a cost of $2,300 each occurrence. The interest rate is 3%. The life of the new pump is 15 years and there is no salvage value at the end of 15 year life

Option B:

Maintain the existing pump based on the following schedule:

Year 1: $6,500

Year 3: $400

Year 5: $500

Year 8: $900

Year 12: $1,200

Year 15: $1,400

The interest rate is 3% and there is no salvage value at the end of 15 year life Based on life cycle cost analysis, what option do you recommend?