From Replacement Technique 1 Section:

2. An existing drill press has a salvage value now of $8000, which will fall to $6400 by the end of the year. The cost of lower productivity using this drill press is $4250 this year. A new-fangled drill press, being considered as a replacement, has the following salvage values and loss of productivity:

Year	Salvage	Productivity Loss
0	$19,200
1	$14,400	$0
2	$11,200	$1000
3	$8000	$2000
4	$4,800	$3000

Assume an interest rate of 15%. Calculate the EUAC for each year of the new-fangled drill press. Calculate the marginal cost of the existing drill press. In what year does the new-fangled drill press EUAC fall below the marginal cost of the existing drill press and what is the amount of the new-fangled drill press EUAC to closest dollar of that year?

Answers: Year new-fangled EUAC is less than Existings marginal cost: ____, EUAC in that year:___________ <25 pts>

Reasoning/Work: