An engineer estimated the equivalent annual costs of a currently installed machine and a new machine to replace it as follows: Years Retained 1 2 3 4 5 Defender EAC 290,000 192,860 126,634 78,642 99,140 Challenger EAC 272,000 252,000 184,000 106,000 76,000 a) Determine the economic service lives of the defender and challenger. b) What should be the replacement decision? Decision 1: Replace the Defender Now Decision 2: Retain the Defender till the end of its useful life Decision 3: Retain the Defender for one more year then re-do the replacement analysis then? Please justify to receive the full point. c) The defender was bought three years ago for $700,000. The current value of that machine is $300,000. The market value of the machine after 1 year is going to be $200,000. The operation cost of this machine at year 1 (from now not from the date of purchase) is $150,000. The interest rate is 20%. Based on this, was the engineer's calculation of the red number in the table correct? If no, then what should be the correct number? An engineer estimated the equivalent annual costs of a currently installed machine and a new machine to replace it as follows: Years Retained 1 2 3 4 5 Defender EAC 290,000 192,860 126,634 78,642 99,140 Challenger EAC 272,000 252,000 184,000 106,000 76,000 a) Determine the economic service lives of the defender and challenger. b) What should be the replacement decision? Decision 1: Replace the Defender Now Decision 2: Retain the Defender till the end of its useful life Decision 3: Retain the Defender for one more year then re-do the replacement analysis then? Please justify to receive the full point. c) The defender was bought three years ago for $700,000. The current value of that machine is $300,000. The market value of the machine after 1 year is going to be $200,000. The operation cost of this machine at year 1 (from now not from the date of purchase) is $150,000. The interest rate is 20%. Based on this, was the engineer's calculation of the red number in the table correct? If no, then what should be the correct number? An engineer estimated the equivalent annual costs of a currently installed machine and a new machine to replace it as follows: Years Retained 1 2 3 4 5 Defender EAC 290,000 192,860 126,634 78,642 99,140 Challenger EAC 272,000 252,000 184,000 106,000 76,000 a) Determine the economic service lives of the defender and challenger. b) What should be the replacement decision? Decision 1: Replace the Defender Now Decision 2: Retain the Defender till the end of its useful life Decision 3: Retain the Defender for one more year then re-do the replacement analysis then? Please justify to receive the full point. c) The defender was bought three years ago for $700,000. The current value of that machine is $300,000. The market value of the machine after 1 year is going to be $200,000. The operation cost of this machine at year 1 (from now not from the date of purchase) is $150,000. The interest rate is 20%. Based on this, was the engineer's calculation of the red number in the table correct? If no, then what should be the correct number? An engineer estimated the equivalent annual costs of a currently installed machine and a new machine to replace it as follows: Years Retained 1 2 3 4 5 Defender EAC 290,000 192,860 126,634 78,642 99,140 Challenger EAC 272,000 252,000 184,000 106,000 76,000 a) Determine the economic service lives of the defender and challenger. b) What should be the replacement decision? Decision 1: Replace the Defender Now Decision 2: Retain the Defender till the end of its useful life Decision 3: Retain the Defender for one more year then re-do the replacement analysis then? Please justify to receive the full point. c) The defender was bought three years ago for $700,000. The current value of that machine is $300,000. The market value of the machine after 1 year is going to be $200,000. The operation cost of this machine at year 1 (from now not from the date of purchase) is $150,000. The interest rate is 20%. Based on this, was the engineer's calculation of the red number in the table correct? If no, then what should be the correct number
