A) What conclusions/recommendations can be drawn from this analysis?

A company ships toys to other countries. 5 years ago they bought a new automatic packaging machine for $150,000. The annual operating, maintenance and insurance costs, as well as the market value of the machine for each of the 10 years of its useful life are presented in the table. Now the company is evaluating the remaining 5 years of its investment to decide the optimal time to replace the machine. It uses 25% as the minimum acceptable rate of return after paying income taxes and depreciates his assets using the MACRS method. To make a decision, the company wants to use inflation in their analysis (the average of the inflation since they bought the machine until now). Its recommended that the analysis considering inflation be done both in real dollars and in current dollars and justify which one to use to make decisions. Year Operation Costs Maintenance Costs Insurance Costs Market Value 1 $16,000 $4,000 $15000 $80,000 2- 10 Increases by $4,000 per year Increases by $3000 per year Decreases by Decreases by $1000 per year $5000 per year