A piece of production equipment is to be replaced immediately because it no longer meets quality requirements for the end product. The two best alternatives are a used piece of equipment (E1) and a new automated model (E2). The economic estimates for each are shown in the accompanying table.

The MARR is 15% per year.
a. Which alternative is preferred, based on the repeatability assumption?(6.5)
b. Show, for the coterminated assumption with a five-year study period and an imputed market value for Alternative B, that the AW of B remains the same as it was in Part (a). Explain why that occurs in this problem.

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Alternative E1 E2 Capital investment Annual expenses Useful life (years) Market value (at end of useful life) $14,000 $14,000 $65,000 $9,000 20 $13,000 $8,000