Commercial Hydronics Incorporation is considering an asset replacement project of replacing a control device. Commercial Hydronics Incorporation can probably run it two more years before it literally falls apart. If the company does so, the device will generate cash flows of $25,000 this coming year and $25,000 the following year. Commercial Hydronics Incorporation can replace the old device with a new one for $70,000 that is more reliable, efficient, and maintenance free. The new device will generate cash flows of $35,000 per year for the next 8 years. The real opportunity cost of capital is 7%.

What is the Equivalent Annual Worth (EAW) for the new device?

Question 7 options:

	$35,000.00
	$28,764.23
	$23,227.26
	$22,734.08

Should Commercial Hydronics Incorporation replace the device now, or wait two years and why?

Question 8 options:

	Commercial Hydronics Incorporation should not replace the device now since the Equivalent Annual Worth (EAW) is less than $25,000.
	Commercial Hydronics Incorporation should not replace the device now since the Equivalent Annual Worth (EAW) is larger than $25,000.
	Commercial Hydronics Incorporation should replace the device now since the NPV from the replacement is larger than $25,000.
	Commercial Hydronics Incorporation should replace the device now since the Equivalent Annual Worth (EAW) is less than $25,000.
	Commercial Hydronics Incorporation should replace the device now since the Equivalent Annual Worth (EAW) is larger than $25,000.