3 (LG 4, 5) Northwest Aerocomposite manufactures fibreglass and carbon fibre fairings. Its largest water-jet cutter will have to be replaced some time before the end of four years. The old cutter is currently worth $49 000. Other cost data for the current and replacement cutters can be found in the tables that follow. The MARR is 15 percent. What is the economic life of the new cutter, and what is the equivalent annual cost for that life? When should the new cutter replace the old? Challenger Operating and Life in Years Salvage Value Maintenance Costs 0 $90 000 72 000 $12 000 57 600 14 400 46 080 17 280 36 864 20 736 29 491 24 883 23 593 29 860 18 874 35 832 03 15 099 42 998 12 080 61 598 Defender Operating and Life in Years Salvage Value Maintenance Costs 0 $49 000 36 500 $17 000 19 875 21 320 15 656 26 806 6742 33 774