An engineer calculated the AW values shown for retaining a presently owned machine additional years.

A challenger has an ESL of 7 years with AW = $$-86,000 per year.

1) Assuming all future costs remain the same, when should the company replace the defender?

The MARR is 12% per year. Assume used machines like the one presently owned will always be available.

2) Assuming all future costs remain the same, when should the company purchase the Challenger?

AW of AW of the Years Retained Defender, Challenger, 1 2 3 4 5 -145,000 -136,000 -96,000126,000 63,000 -92,000 39,00053,000 -49,000-38,000