2 Analysis of financial aspects and report on replacements of capital equipment. Value: 20% Question 1: Describe the three alternative replacement policies: (i) Replace only on failure. (ii) Age-based preventive replacement. (iii) Block replacement. Question 2: Canmade Limited wants to determine the capital replacement age for its turret sideloaders to minimise total discounted cost. Historical data analysis has produced the following information (all costs in present day dollars): Year Average Operating and Maintenance Cost ($/year) Resale Value at End of Year ($) 1 16 000 100 000 2 28 000 60 000 3 46 000 50 000 4 70 000 20 000 The cost of a new turret sideloader is $150 000, and the interest rate for discounting purposes is 12%. Carry out calculations using a hand calculator to solve this problem. Show your detailed working