3. A production line that must last for another 3 years will require $200,000 to upgrade. The annual cost of operating the production line will be $310,000, which is expected to be remain constant. To modify and repair the production line would cost $350,000 and has a 50% chance of reducing annual costs to S130.000. There is a 25% chance that the reduced annual costs of the modified production line will increase by 10% each year. There is a further 25% chance that the reduced annual costs will increase by 20% each year. If a 12% rate of return is required, should the modification be undertaken? One-time Modify cost Annual operating Maintenance fee cost No modification $200,000 $310.000 Modification 50% $200,000 $350,000 $130,000; 1 0% 25% $200,000 $350,000 $130,000; 10% 25% $200,000 $350,000 $130,000: 1 20%