to satisfy increased demand. The machine can be upgraded now for $70,000 or sold to a smaller company for $40,000. The current machine will have an annual operating cost of $85,000 per year. If upgraded, the presently owned machine will be kept in service for only 3 more years, then replaced with a machine that will be used in the manufacture of several other product lines. This replacement machine, which will serve the company now and for at least 8 years, will cost $220,000. Its salvage value will be $50,000 for years 1 through 5; $20,000 after 6 years; and $10,000 thereafter. It will have an estimated operating cost of $65,000 per year. The company asks you to perform an economic analysis at 20% per year, using a 5-year time horizon. Should the company replace the presently owned machine now, or do it 3 years from now? What are the AW values?(please solve it using formula)
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