Allen Construction purchased a crane 6 years ago for $130,000. They need a crane of this capacity for the next 5 years. Normal operation costs $35,000 per year. The current crane will have no salvage value at the end of 5 more years. Allen can trade in the current crane for its market value of $40,000 toward the purchase of a new one, which costs $150,000. The new crane will cost only $8,000 per year under normal operating conditions and will have a salvage value of $55,000 after 5 years. If MARR is 20%, determine which option is preferred.

Use the opportunity cost approach (outsiders viewpoint approach). Show the EUAC values used to make your decision: Keep existing crane: Replace with new crane: Carry all interim calculations to 5 decimal places and then round your final answer to the nearest dollar. The tolerance is 10. Preferred option?