9-4. A manufacturer moves pallets of materials with a forklift truck. He has consistently used the same make and model of forklift over the past several years. The purchase price has been relatively constant at $8,000 each.

Records of operation and maintenance indicate these average expenses per year as a function of age of the vehicle:

Year 1 2 3 4 5 Operating Expense $3,000 $3,000 $3,500 $4,000 $4,500 The salvage (market) values of the forklift are also reasonably well known as a function of age:

Year 1 2 3 4 5 Salvage Value $6,000 $5,000 $4,000 $2,500 $1,250 Find the best time to replace a forklift truck when the MARR = 15% per year. (9.6)