Machine A was purchased 5 years ago for

$90,000. Its operating cost is higher than expected, so it will be used for only 4 more years. Its operating cost this year will be $40,000, increasing by $2000 per year through the end of its useful life. The challenger, machine B, will cost

$150,000 with a $50,000 salvage value after its 10-year ESL. Its operating cost is expected to be

$10,000 for year 1, increasing by $500 per year thereafter. What is the market value for machine A that would make the two machines equally attractive at an interest rate of 12% per year?

Replacement Study Over a Study Period