Engineering Economy 7th Edition by Leland Blank ,Anthony Tarquin

Exercise 38

The AW of a 3-year-old machine that is used in the manufacture of modular magnetic encoders, which provide data on the speed and positioning of rotating motor shafts, is $-48,000. A challenger will have a first cost of $90,000, an operating cost of $29,000, and a salvage value after 5 years that may vary considerably. For an interest rate of 10% per year and optimistic, most likely, and pessimistic salvage values of $15,000, $10,000, and $2000, respectively, the salvage value(s) for which the challenger AW will be lower than that of the defender are:
A) All of them
B) Only the optimistic one
C) Only the optimistic and pessimistic ones
D) None of them