17. Dell is considering replacing one of its material handling systems. The old system was purchased '1' years ago for $130,000 and was depreciated as MACRSGDS 5-year property since the system is used in the manufacture of electronic components. It has an annual 06;.\" cost of $48,000, a remaining operational life of 8 years, and an estimated salvage value of $6,000 at that time. A new system can be purchased for $175,000. It will be worth $50,000 in 8 years, and it will have annual 062M costs of only $1?,000 per year due to new technology. If the new system is purchased, the old system will be traded in for $55,000, even though the old system can be sold for only $45,000 on the open market. Leasing a new system will cost $31 ,000 per year, payable at the beginning of the year, plus operating costs of $15,000 per year payable at year-end. If the new system is leased, the existing material handling system will be sold for its market value of $45,000. Use an 8-year planning horizon, an annual worth analysis, a tax rate of 40 percent, and an after-tax MARK of 9 percent to decide which material handling system to recommend: keep existing, trade in existing and purchase new, or sell existing and lease. 3. Use the cash ow approach (insider's viewpoint approach}. (11.2.2) b. Use the cash ow approach (insider's viewpoint approach}, except note that a Section 1031 like-kind property exchange is to be used. The equipment replaced will continue to be replaced by like-kind investments in the United States indenitely. Recall that a Section 1031 like-kind property exchange does not apply to leases. (1 1.4)