Question 1A construction company is considering replacing one of its tower cranes with a newer model. The current crane in question is now worth $110,000 (future market values are forecasted to drop by 25% per year). If kept, this machine, the Defender, will require an immediate overhaul that would cost $40,000, and the operation cost is $60,000 for the first year and will increase by 35% afterwards.

The new crane (Challengar) has an 8-years service life, costs $400,000 with O & M costs of $50,000 for the 1st year and will increase by 35% for subsequent years. The Challenger's market value will drop by 30% per year through its service life.

Knowing that the company's MARR is 12%

A] Plot total AE cost vs useful life for the defender & the challenger for 6 years. B] Find the economic lives of the defender & the challenger. C] Determine if and when the defender should be replaced.