How to calculate the EUAC of the defender and challenger (the answer is given in the end of the solution)?

Replacement Analysis Using Present Worth (Before Taxes) Afirm owns a pressure vessel that it is contemplating replacing. The old pressure vessel has annual operating and maintenance expenses of $60,000 per year and it can be kept for five more years, at which time it will have zero MV. It is believed that $30,000 could be obtained for the old pressure vessel if it were sold now A new pressure vessel can be purchased for $120,000. The new pressure vessel will have an MV of $50,000 in five years and will have annual operating and maintenance expenses of $30,000 per year. Using a before-tax MARR of 20% per year, determine whether or not the old pressure vessel should be replaced. Astudy pe riod of five years is appropriate Solution The first step in the analysis is to determine the investment value of the defender (old pressure vessel). Using the outsider viewpoint, the investment value of the defender is $30,000, its present MV. We can now compute the PW (or FW or AW) of each alternative and decide whether the old pressure vessel should be kept in service or replaced immediatelv Defender: PW (20%) =-$30,000 _ $60,000(P/A, 20%, 5) -$209A36. Challenger: PW(20%)--$120,000-$30,000(P/A, 20%, 5) + $50,000(P/F, 20%, 5)--$189,623 The PW of the challenger is greater (less negative) than the PW of the defender Thus, the old pressure vessel should be replaced immediately. (The EUAC of the defender is $70,035 and that of the challenger is $63,410.)