A machine purchased 3 years ago for $140,000 is now too slow to satisfy the demand...

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A machine purchased 3 years ago for $140,000 is now too slow tosatisfy the demand of the customers. It can be upgraded now for$81,000 or sold to a smaller company internationally for $43,000.The upgraded machine will have an annual operating cost of $79,000per year and a $29,000 salvage value in 3 years. If upgraded, thepresently owned machine will be retained for only 3 more years,then replaced with a machine to be used in the manufacture ofseveral other product lines. The replacement machine, which willserve the company now and for a maximum of 8 years, costs $225,000.Its salvage value will be $53,000 for years 1 through 5; $20,000after 6 years; and $10,000 thereafter. It will have an estimatedoperating cost of $45,000 per year. Perform an economic analysis at10% per year using a specified 3-year planning horizon.
a) Determine if the current machine should be replaced now or 3years from now.
b) Once decided, determine the equivalent AW for the next threeyears.

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A machine purchased 3 years ago for $140,000 is now too slow tosatisfy the demand of the customers. It can be upgraded now for$81,000 or sold to a smaller company internationally for $43,000.The upgraded machine will have an annual operating cost of $79,000per year and a $29,000 salvage value in 3 years. If upgraded, thepresently owned machine will be retained for only 3 more years,then replaced with a machine to be used in the manufacture ofseveral other product lines. The replacement machine, which willserve the company now and for a maximum of 8 years, costs $225,000.Its salvage value will be $53,000 for years 1 through 5; $20,000after 6 years; and $10,000 thereafter. It will have an estimatedoperating cost of $45,000 per year. Perform an economic analysis at10% per year using a specified 3-year planning horizon.a) Determine if the current machine should be replaced now or 3years from now.b) Once decided, determine the equivalent AW for the next threeyears.