New equipment used to control the thickness of fibre cement sheet cladding is being developed. It is estimated to sell for $130,000 more than the current design. Based on present product data, the typical installer has the following probabilities of achieving different performance results and cost savings (relative to the current unit) in the first year of operation (assume these annual cost savings would be escalated 5% per year thereafter; a five-year analysis period is appropriate for this situation; the before-tax market MARR is 18% per year; and the net MV at the end of five years is 0): Performance Results Optimistic Most likely Pessimistic Probability 0.20 0.60 0.20 Calculate the E(PW) and determine whether the new equipment is economically preferable to the current equipment. $12,500, old preferable $12,500, new preferable $16,212, old preferable $16,212, new preferable $19,720, new preferable Cost Savings in First Year $65,000 42,500 17,000