The equivalent annual worth of an existing machine at American Semiconductor is estimated to be $ −70,000 per year over its remaining useful life of 3 years. It can be replaced now or later with a...

The equivalent annual worth of an existing machine

at American Semiconductor is estimated to

be $ −70,000 per year over its remaining useful

life of 3 years. It can be replaced now or later with

a machine that will have an AW of $ −90,000 per

year if it is kept for 2 years or less, $75,000 if it is

kept between 3 and 5 years, and $ −65,000 if it is

kept for 6 to 8 years. The company wants an analysis

of what it should do for a 3-year study period at an interest rate of 15% per year. You should recommend

that the existing machine be replaced:

(a) Now

(b) One year from now

(c) Two years from now

(d ) Do not replace it