4. 13.37 The information for a defender and challenger is shown below. All monetary values are in $1000 units. Assume the assets will be salvaged at their original salvage estimates. Since no revenues are estimated, all taxes are negative and considered “savings” in the cash flow computations. Use an after-tax MARR of 12% per year, Te = 21%, and a study period of 4 years to perform a replacement analysis

(a) by factors, and

(b) by spreadsheet. Table Summary: Table divided into three columns shows monetary value data based on the rate of interest. Column 1 notes the list of factors for calculating the cash flow. Columns 2 to 3 are marked as: defender and challenger. Defender Challenger First cost, $1000 −45 −24 Estimated S at purchase, $1000 5 0 Market value now, $1000 35 — AOC, $1000 per year −7 −8 Depreciation method SL MACRS Recovery period, years 8 3 Useful life, years 8 5 Years owned 3 —