NAME: Prof. Eng. Jos Ral Diaz, PE 21 de marzo de 2018 WI-17 STUDENT NUMBER: 1. Evaluate the following replacement alternative. A new machine will be consider for posible replacement. MARR before income tax is 10%. More information below. (25ptos) Defender Current market value Upgrade Cost (Year O) Annual Revenues Annual Expenses $20,000 $2,000 $4,000/yr (from the fourth (4) to ten (10) year) $1,000lyr Also an (Arithmetic Series) increased by $250 from year fourth to ten. 2 Useful life (years) Market value at the end of year 10 10 years $8,000 Purchased Cost Installation Cost Annual Revenues Annual Expense $19,000 $5,500 $5,000/yr(from the third (3) to ten (10) year) $1,400/yr (from the first to ten year) and (Geometric Series) the fourth yeara increase by 5% until the 10 year Useful life (years) Market value at the end of year 10 10 years $10,500 a. Draw the cash flow diagrams Defender and Challenger b. Should the existing machine be replaced? (Determine PW(10%) for defender and challenger )