Question: b 1- A company is currently using a machine, which has 5 years of remaining life and the annual operating costs (AW) given in the

1- A company is currently using a machine, which has 5 years of remaining life and the annual operating costs (AW) given in the table below. These costs are calculated based on initial cost, annual maintenance costs and salvage values. The engineer is asked if this current machine is to be replaced with a new machine which has an optimum life of n=3 years and the corresponding annual costs of 23,250 dolars/year for every year. What is the optimum life of the current machine and should it be replaced now? Number of years to be 2 Operated (n) Operating costs/Year 30.265 if used n years 27,670 4 5 28,420 25,360 26,210 Ans a) Optimum Life=3 Years Replace it now b) Optimum Life=1 Year. Replace it now c) Optimum Life-4 Years, Replace it now d) Optimum Life=3 Years. Do not Replace it now e) Optimum Life Years. Do not Replace it now

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