Nano Technologies intends to use the newest and fi nest equipment in its labs. Accordingly, a senior engineer has recommended that a 2-year-old piece of precision measurement equipment be replaced immediately. This engineer believes it can be shown that the proposed equipment is economically advantageous at a 10% per year return and a planning horizon of 3 years.

(a) Perform the replacement analysis using the annual worth method for a specified 3-year study period.
(b) Determine the challenger's capital recovery amount for the 3-year study period and the expected full life. Comment on the effect made by the 3-year studyperiod.

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Current Proposed -30,000 40,000 Orlginal purchase price,S Current market value, S Remaining life, years Estimated value in 3 years, S Salvage value after 15 years, S Annual operating cost, $ per year 17,000 9,000 -8,000 15 20,000 5,000 -3,000