1. The projected market value and M&O costs associated with a presently owned machine and best challenger available are shown. Determine if and when the defender should be replaced with the outside vendor using an interest rate of 4% per semiannual compounded yearly. Assume used equipment similar to the defender will always be available. (25 pts.) Defender Market value Year Year M&O Cost S per Year 0 ---- 0 1 2 3 55,000 45,000 37.000 31,000 24,000 18.000 13,000 8,000 4,000 4 5 12,000 12,000 14,000 16,000 18,000 20,000 22,000 24,000 Challenger Market value M&O Cost $ $ per Year 80,000 65,000 7,000 55,000 7,000 45,000 7,000 30,000 8,000 25,000 9,000 20,000 9,000 16,000 9,000 12,000 9,000 2 3 4 5 6 7 8 6 8