With the estimates shown below, Sarah needs to determine the trade-in (replacement) value of machine X that will render its AW equal to that of machine Y at an interest rate of 14% per year. Determine the replacement value.

Machine X Machine Y

Market Value, ? $91,000

Annual Cost, $ per Year 55,000 40,000 for year 1, increasing by 2000 per year thereafter.

Salvage Value 18,500 16,000

Life, Years 3 5

The replacement value is $