2. Allen Company got permission to harvest southern pines from one of its timber land tracts. It's considering purchasing a feller buncher, which has the ability to hold saw, and place trees in bunches to be skidded to the log landing. The logging operation on this timberland track must be completed in three years. Allen could speed up the logging operation but doing so is not desirable because the market demand of the timber does not warrant such haste. Because the logging operation is to be done in wet conditions, this task requires a specially made feller-buncher with high-flotation tires and other devices designed to reduce site impact. There are two possible models of feller-buncher that Allen could purchase for this job. Model A is a two year old used piece of equipment whereas Model B is a brand- new machine Model A costs $275,000 and has a life of 10,000 hours before it will require any major overhaul. The operating cost will run S25000 per year for 2000 hours of operation. At this operational rate, the unit will be operable for five years, and at the end of that time, it's estimated that the salvage value will be $130,000. The more efficient model B costs $250000 has a life of 14000 hours before requiring any major overhaul and costs $32500 to operate for 2000 hours per year in order to complete the job within three years. The estimated salvage value of model B at the end of seven years is $180,000 Since, the life time of either model exceeds the required service period of three years, Allan Company has to assume some things about the used equipment at the end of that time. Therefore, the engineers at Allen estimate that after three years, the model A unit could be sold for $180000 and the model B unit for S130,000. Assuming that the firms MARR is 12% (5 Points)