Use Excel.

5. (20 points) CEMEX has a cement revolving tower that was purchased 3 years ago for $45,000. It has been depreciated over the three years as a MACRS-GDS 5-year property. It has an estimating remaining life of 6 years. O&M costs are $20,000 per year. Alternative A is to keep the existing revolving tower. It has a current value of $15,000, and it will have a salvage value of $2,000. Alternative B (MACRS-GDS 5-year property class) is to buy a new revolving tower that will cost $65,000 and will have a salvage value of $65,000 (0.75) at the end of year 1. O&M costs are $3,000 increasing by $1,000 per year. Alternative C is to trade in the existing revolving machine on a "treated revolving unit" that requires vastly less O&M costs at only $2,000 per year. It costs $75,000, and the trade-in allowance for the existing auger is $18,000. The "treated revolving unit" will have an $18,000 salvage value after 6 years, and has a MACRS-GDS 5-year property class. The after-tax MARR is 9%, the tax rate is 35%, and the planning horizon is 5 years. Clearly show the ATCF profile for each alternative, and using an EUAC comparison and an outsider cash flow approach, decide which is the more favorable alternative. 5. (20 points) CEMEX has a cement revolving tower that was purchased 3 years ago for $45,000. It has been depreciated over the three years as a MACRS-GDS 5-year property. It has an estimating remaining life of 6 years. O&M costs are $20,000 per year. Alternative A is to keep the existing revolving tower. It has a current value of $15,000, and it will have a salvage value of $2,000. Alternative B (MACRS-GDS 5-year property class) is to buy a new revolving tower that will cost $65,000 and will have a salvage value of $65,000 (0.75) at the end of year 1. O&M costs are $3,000 increasing by $1,000 per year. Alternative C is to trade in the existing revolving machine on a "treated revolving unit" that requires vastly less O&M costs at only $2,000 per year. It costs $75,000, and the trade-in allowance for the existing auger is $18,000. The "treated revolving unit" will have an $18,000 salvage value after 6 years, and has a MACRS-GDS 5-year property class. The after-tax MARR is 9%, the tax rate is 35%, and the planning horizon is 5 years. Clearly show the ATCF profile for each alternative, and using an EUAC comparison and an outsider cash flow approach, decide which is the more favorable alternative