A critical machine in BHP Billiton's copper refining operation was purchased $7$ years ago for $$160,000.$ Last year a replacement study

was performed with the decision to retain it for $3$ more years. The situation has changed. The equipment is estimated to have a value

of $$8000$ if "scavenged" for parts now or anytime in the future. If kept in service, it can be minimally upgraded at a cost of $$43,000$ to

make it usable for up to $2$ more years. Its operating cost is estimated at $$22,000$ in the first year and $$29,000$ in the second year.

Alternatively, the company can purchase a new system, the challenger, that will have an $A{W}_C$ of $$-43,500$ over its ESL. Use a MARR of

$10\%$ per year and annual worth analysis to determine when the company should replace the machine.

The AW value of the challenger is $$-$

and the AW value of the defender at the end of year $2$ is $$-$

The company should replace the machine