Minimum EUAC of 120,000

Mary O'Leary's company ships fine wool garments from County Cork, Ireland. Five years ago she purchased some new automated packing equipment having a first cost of $125,000. The annual costs for operating, maintenance, and insurance, as well as market value data for each year of the equipment's 10-year useful life are as follows. Annual Costs in Year n for Year Market Value n Operating Maintenance Insurance in Year n 1 $16,000 2 20,000 3 24,000 4 28,000 5 32,000 6 36,000 7 40,000 44,000 9 48,000 52,000 $ 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000 50,000 $17,000 16,000 15,000 14,000 12,000 11,000 10,000 10,000 10,000 10,000 $80,000 78,000 76,000 74,000 72,000 70,000 68,000 66,000 64,000 61,000 10 Now Mary is looking at the remaining 5 years of her investment in this equipment. What is the marginal cost for each of the remaining 5 years? When, if at all, should Mary replace this packing equipment with a new asset that has a minimum EUAC of $120,000