An industrial engineer with an MBA degree is trying to get the company’s stock to rise by cutting costs. He determined that the equivalent annual worth of an existing machine over its remaining useful life of 1 or 2 years will be $74,000. The IE also determined that the machine can be replaced with a more advanced model that will have AW$84,000 if it is kept for 2 years or less,

$73,000 if it is kept between 3 and 4 years, and

$65,000 if it is kept for 5 to 10 years. The company uses a 3-year planning period. At an interest rate of 15% per year, the IE should recommend that the existing machine be replaced:

a. now.

b. one year from now.

c. two years from now.

d. it should not be replaced.