A machine tool purchased two years ago for

$40,000 has a market value that can be described by the relation $40,000  3000k, where k is the number of years from time of purchase.

Experience with this type of asset has shown that its annual operating cost is described by the relation $30,000  1000k. The asset’s salvage value was originally estimated to be $10,000 after a predicted 10-year useful life. Determine the current estimates for P, S, and AOC for a replacement study, assuming it will be kept only one more year, which will be the third year of ownership.