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Machine A which is a basic model costs $ 2 5 , 0 0 0 and lasts 5 years. At the end of the 5

Machine A which is a basic model costs $25,000 and lasts 5 years. At the end of the 5 years it has a salvage value of $1,500 and its market value at the end of 3 years is $7,000. An enhanced model, Machine B sells for $36,000 and has a life of 8 years with a salvage value of $8,500. The benefit that these two machines are anticipated to provide is $9,500 per year, indefinitely. Looking at an 8-year window with a rate of 10% APR compounded yearly, what is the difference between the net present worth of Machine B over Machine A?(Hint: the second copy of Machine A can be sold at the end of the 8th year for the price that it will command after a 3-year life.)
$11,565
$8,428
$4,291
$2,940
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