Solutions: The AEC for defender is $2241.58 and AEC for challenger is -$4643.18

- -01 @ Assignment-5-ENG M 3 ) ENG M 3 10 Assignment #5. YouTube X |Ofile///C 310/ass/Assignment-5-ENG%20M%203 10 pdf 11.4 Duluth Medico purchased a digital image-processing machine three years ago at a cost of $50,000. The machine had an expected life of eight years at the time of pur chase and an expected salvage value of $5,000 at the end of the eight years. The old machine has been slow at handling the increased business volume, so management is considering replacing the machine. A new machine can be purchased for $85,000 including installation costs. Over its five-year life, the machine will reduce cash op- erating expenses by $30,000 per year. Sales are not expected to change. At the end of its useful life, the machine is estimated to be worthless. The old machine can be sold today for $10,000. The firm's interest rate for project justification is known to be 15%The firm does not expect a better machine (other than the current challenger) to be available for the next five years. Assuming that the economic service life of the new machine, as well as the remaining useful life of the old machine, is five years, (a) Determine the cash flows associated with each option (keeping the defender versus purchasing the challenger) (b) Should the company replace the defender now? 11.6 A firm is considering replacing a machine that has been used to make a certain kind of packaging material. The new, improved machine will cost $32,000 installed and will have an estimated economic life of 10 years, with a salvage value of $2500 611 PM O Type here to search ENG 2018-08-09