\fKeep or Replace the Kiln Case PE In Example 1 1.8, the in-place kiln and replacement killm (GH) were evaluated using a fixed study pe- riod of & years. This is a significantly shortened period compared to the expected 12-year life of the challenger. Use the best estimates available throughout this case to determine the impact on the capital recovery amount for the GH kiln of short- ening the evaluation time from 12 to 6 years. Nabisco Bakers currently employs staff to operate the equipment used to sterilize much of the mixing, baking, and packaging facilities in a large cookie and cracker manufacturing plant in lowa. The plant manager, who is dedicated to cutting costs but not sacrificing quality and hygiene, has the projected data shown in the table below if the current system were retained for up to its maximum expected life of 3 years. A contract company has proposed a turnkey sanitation system for $5 0 million per year if Nabisco signs on for 4 to 10 years, and $5.$ mil- ion per year for a shorter number of years. Retained AM, $ per Year Close.Down Expense, $ -3,000,000 -2,300,000 -2 500,000 -2,300,000 -2 000,000 -3,000,000 -1,000 00D -3,000,000 -1,000,000 -3 5001000 -500,000 (4) At a MARR = 8% per year, perform a re- placement study for the plant manager with fixed study period of 3 years, when it is an- ticipated that the plant will be shut down due to the age of the facility and projected tech- nological obsolescence. As you perform the study, take into account that regardless of the number of years that the current sanitation system is retained, a one-time close-down11.47 In conducting a replacement study, all of the follow- ing are correct viewpoints for the analyst except: (a) Consultant's (b) Owner's c Qursider's () Nonowner's 11.48 A sunk cost is the difference between: (4) The first cost and the salvage value (b) The market value and the salvage value c The first cost and the market value The book value and the market value 11:49 A truck was purchased 3 years ago for $45,000 and can be sold today for $24,000. The operating costs are $9000 per year, and it is expected to last 4 more years with a $3000 salvage value. A new truck, which will perform that same service, can be pur- chased for $50,000, and it will have a life of 10 years with operating costs of $28,000 per year and a $10,000 salvage value. The value that should be used as P for the presently owned vehicle in a replacement study is: (4) $45,000 (6) $5000 (3) $501000 () $24.000The independent project estimates below have been developed by the engineering and finance managers. The corporate MARR is 8%% per year, and the capital investment limit is $4 million. Se- lect the economically best projects using the PW method and (a) hand solution and (b) spreadsheet solution. Project NCF, Project Cost, 5 M Life, Years $ per Year -15 360,00D -3.0 10 600,000 -13 520,000 -20 820,GOD Use the PW method to evaluate four independent projects. Select as many as three of the four proj- ects. The MARR is 12% per year, and up to $16,000 in capital investment fiands are available. Project ment, 5 -5000 -8,000 -9,000 - 10,000 cars 5 NOF Estimates, $ per Wear 1000 500 50DO 1700 SODO 2400 500 2000 3000 500 17,00D 3900 10,500