A three-year-old small crane is being considered for early replacement. Its current market value is $13 000. Estimated future market values and annual operating costs for the next five years are given in the following table:

\fIn any given year N: EAC(operating, N) = M AOCt * (P/F, i, t) (A/P, i, N) where AOC is the annual operating cost in period t.Salvage EAC EAC Year Value (Maintenance) (Capital) EAC Total 0 13 000 9 000 2 500 5 300 7 800 N 8 000 2 595 3 681 6 276 6 000 2 717 3 415 6 132 4 2 000 2 887 3 671 6 558 U 0 3 150 3 429 6 579 The economic life of the crane is three years, since this is when the EAC is minimized