A forklift will last for only 2 more years. It costs $5,000 a year to maintain. For $20,000 you can buy a new lift that can last for 10 years and should require maintenance costs of only $2,000 a year.

a. If the discount rate is 5% per year, should you replace the forklift? (Round your answers to the nearest whole dollar.)

The equivalent annual cost (EAC) of the new machine $_____

The equivalent cost of owning and operating the new machine $_____

You should/or should not replace?

b. If the discount rate is 10% per year, should you replace the forklift? (Round your answers to the nearest whole dollar.)

The equivalent annual cost (EAC) of the new machine $______

The equivalent cost of owning and operating the new machine $_____

You should/or should not replace?