Two processes can be used for producing a polymer that reduces friction loss in engines. Process K will use a presently owned machine that has a current market value of $160,000, an operating cost of

$7000 per month, and a salvage value of $50,000 after 1 year and $40,000 after its maximum 2-year life. Used machines of this type can be purchased and the same estimates can be used for a period of 1 or 2 years. Process L will utilize a new machine that has a first cost of $210,000, an operating cost of $5000 per month, and salvage values of

$100,000 after 1 year, $70,000 after 2 years,

$45,000 after 3 years, and $26,000 after its maximum 4-year life. You have been asked to determine which process is better using a study period of

(a) 1 year,

(b) 2 years, and

(c) 3 years. The company’s MARR is 12% per year compounded monthly.