1. Equipment purchased 2 years ago for $70,000 was expected to have a useful life of 5 years with a salvage value of $5,000. It underperformed and was upgraded for $30,000 a year ago. The increased demand now requires the equipment to be upgraded again for an additional $25,000 or replaced with new equipment which will cost $85,000. If replaced, the existing equipment will sell for $6,000. 
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3. When conducting a replacement study, what is the first cost to use for the currently owned machine?

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