Use the PW method to select the better of the following alternatives:

Assume that the defender was installed five years ago. The MARR is 10% per year.
Definition of alternatives:
A: Retain an already owned machine (defender) in service for eight more years.
8: Sell the defender and lease a new one (challenger) for eight years.
Alternative A (additional information):
Cost of defender five years ago = $500,000 BV now = $111,550
Estimated MV eight years from now = $50,000 Present MV = $150,000

Annual Expenses Alternative A Alternative B Defender: Challenger: Labor Material Insurance and $300,000 250,000 $250,000 100,000 None 4% of initial property taxes capital investment Maintenance $8,000 Leasing cost None None $100,000