The Dietrich Company produces and sells 5,300 modular computer desks per year at a selling price of $475 each. Its current production equipment, purchased for $1,300,000 and with a five-year useful life, is only two years old. It has a terminal disposal value of $0 and is depreciated on a straight-line basis. The equipment has a current disposal price of $525,000. However, the emergence of a new moulding technology has led Dietrich to consider either upgrading or replacing the production equipment. The following table presents data for the two alternatives: (Click icon to view the data.) Required Requirement 1. Should Dietrich upgrade its production line or replace it? Show your calculations. (Only complete the necessary answer boxes. Leave unused cells blank. Use parentheses or a minus sign for a negative cost.) Over 3 years Cash operating costs Upgrade 2800000 Replace 400000 -525000 Difference in favour of Replace 1200000 525000 Current disposal price One time capital costs, written off periodically as depreciation Total relevant costs Dietrich Company should the equipment. When comparing relevant costs between the choices, replacing the equipment is than the cost to upgrade. Requirement 2. Now, suppose the one-time equipment cost to replace the production equipment is somewhat negotiable. All other data are as given previously. What is the maximum one-time equipment cost that Dietrich would be willing to pay to replace the old equipment rather than upgrade it? Dietrich would be willing to pay up to $ Requirement 3. Assume that the capital expenditures to replace and upgrade the production equipment are as given in the original exercise but that the production and sales quantity is not known. For what production and sales quantity would Dietrich (a) upgrade the equipment or (b) replace the equipment? (Round your answer to the nearest whole number.) Dietrich would want to upgrade if the production and sales quantity was less than units for the three years. Requirement 4. Assume that all data are as given in the original exercise. Dan Doria is Dietrich's manager, and his bonus is based on operating income. Because he is likely to relocate after about a year, his current bonus is his primary concern. Which alternative would Doria choose? Explain. (Round your answers to the nearest whole dollar. Do not leave any cells blank.)