A piece of production equipment is to be replaced immediately because it no longer meets quality requirements for the end product. the two best alternatives are a used piece of equipment(e1) and a new automated model(e2). the economic estimates for each are shown in the accompanying table.

e1 e2

capital investment $14000 $65000

annual expenses $14000 $9000

useful life(yrs) 5 20

market value $8000 $13000

(at end of useful life)

1. which alternative is preferred, based on the repeatablity assumption?

2. show, for the coterminated assumption with a five year study period and an imputed market value for alternative b, that the AW

of b remains the same as it was in part 1. explain why that occurs in this problem

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