A presently owned machine (Defender) has a useful life of 3 more years. Annual worth calculations for 1, 2, and 3 years are made and the following results are obtained.
AW1= $ 42,400
AW2= $44,590
AW3= $47,356
A new improved machine (Challenger) that can be purchased will have a maximum useful life of 4 years. Annual worth calculations for 1, 2, 3, and 4 years yield the following results.
AW1= $85,000
AW2 =$53,571
AW3= $43,127
AW4 =$37,928
when should the presently owned machine (Defender) be replaced?
Select one:
a. Replace now
b. Replace 1 year later
c. Replace 3 years later
d. Replace 4 years later
e. Replace 2 years later
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