A currently owned shredder originally costing \($800,000\) was purchased 6 years ago for use in a refuse-powered electrical generating plant. It was depreciated as MACRS-GDS 5-year property due to its status as an alternative energy item. It has a present net realizable value of \($210,000\) and is expected to have a market value of \($10,000\) after 4 more years. Operating and maintenance disbursements are \($100,000\) per year. An equivalent shredder can be leased for \($200\) per day plus \($80\) per hour of actual use as determined by an hour meter, with both components assumed to be paid at year-end. Actual use is expected to be 1,500 hours and 250 days per year. Use the cash flow approach (insider’s approach), a 4-year planning horizon, a tax rate of 40 percent, and an after-tax MARR of 9 percent to perform an after-tax analysis to determine the preferred alternative using the annual cost criterion.

a. Use only the above information. 

b. Consider the addition of a third alternative, to operate without any shredder, at an annual cost of \($190,000.