A 5 year-old tooling kit that was purchased new for $50,000 and has a current market (trade-in) value of $8,000 and expected O&M costs of $8,600, increasing by $1,000 per year. The kit is in need of an immediate overhaul (repair) expected to cost $1,000. Future market values are expected to decline by 25% annually (going forward). The kit can be used for another 7 years at most. The optimal replacement kit information is below.

The new model kit will be needed indefinitely. Assume a unique minimum AE(15%) for both kits (both the current and replacement kit).

The replacement kit has N*=4 and AEC*_C = $14,000

Find AEC*_D.