3. 9.23 Two processes can be used for producing a polymer that reduces friction loss in engines. Process K will use a presently owned machine that has a current market value of $160,000, an operating cost of $7000 per month, and a salvage value of $50,000 after 1 year and $40,000 after its maximum 2-year life. Used machines for this type can be purchased and the same estimates can be used for a period of 1 or 2 years. Process L will utilize a new machine that has a first cost of $210,000, an operating cost of $5000 per month, and market values of $100,000 after 1 year, $45,000 after 2 years, $25,000 after 3 years, and $20,000 after its maximum 4-year life. You have been asked to determine which process is better using a MARR of 12% per year compounded monthly, and a study period of

(a) 1 year,

(b) 2 years, and

(c) 3 years.

(d) Is the decision to retain K sensitive to different study periods?Page 298