Engineering Economy 7th Edition by Leland Blank ,Anthony Tarquin

Exercise 20

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, -$65,000 if it is kept between 3 and 5 years, and $-110,000 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. The replacement must be made now or 3 years from now, according to the department supervisor. You should recommend that the existing machine be replaced:
A)Now
B) 1 year from now
C) 2 years from now
D) Can't tell; must find AW of different retention combinations for the two machines