In order to replace an old process for producing a polymer that reduces friction loss in engines, two current-technology machines have been identified. Process K will have a first cost of $160,000, an operating cost of $7000 per month, and a salvage value of $50,000 after 1 year and $40,000 after its maximum 2-year life. Process L will have a first cost of $210,000, an operating cost of $5000 per month, and salvage values of $100,000 after 1 year, $70,000 after 2 years, $45,000 after 3 years, and $26,000 after its maximum 4-year life. You have been asked to determine which process is better using a study period of

(a) 1 year,

(b) 2 years,

(c) 3 years.

The company’s MARR is 12% per year compounded monthly.