Part B: [15 points] Your company is considering replacing a currently installed machine with a newer one. The tables below show all information related to the market value, the O&M costs each year, and the corresponding results from AW calculations related to equivalent annual costs. The used interest rate is 12%.

Defender n /Market Value/ O&M Costs/ CR(12%)/ OC(12%)/ AEC(12%) 0 /$100,000/-/-/-/- 1 /$80,000/ $5,000/ $32,000/ $5,000/ $37,000 2 /$64,000 /$9,500 /$28,981 /$7,123 /$36,104 3 /$51,200 /$14,000 /$26,462 /$9,161 /$35,623 4 /$40,960 /$18,500 /$24,353 /$11,115 /$35,468 5 /$32,768 /$23,000 /$22,583 /$12,986 /$35,569 6 /$26,214 /$27,500 /$21,092 /$14,774 /$35,866

Challenger n /Market Value/ O&M Costs/ CR(12%)/ OC(12%)/ AEC(12%) 0 /$120,000/-/-/-/- 1 /$102,000/ $6,000/ $32,400 /$6,000 /$38,400 2 /$86,700 /$9,000 /$30,108 /$7,415 /$37,523 3 /$73,695 /$12,000/ $28,122 /$8,774 /$36,896 4 /$62,641 /$15,000 /$26,402 /$10,077 /$36,478 5 /$53,245 /$18,000 /$24,908 /$11,324 /$36,232 6 /$45,258 /$21,000 /$23,610 /$12,516 /$36,126 7 /$38,469 /$24,000 /$22,481 /$13,654 /$36,136 8 /$32,699 /$27,000 /$21,498 /$14,739 /$36,237

Based on these tables, please answer the following: 1. What is the remaining economic service life of the defender (how many years from now)? And what is its corresponding equivalent annual costs? [4 points] 2. What is the remaining economic service life of the challenger (how many years from now)? And what is its corresponding equivalent annual costs? [4 points] 3. When is the optimum time to replace the defender? Please justify your answer with calculations or numerical values to receive the grade. (you might need to do marginal analysis depending on the numbers in the tables) [7 points]

PLEASE SOLVE SHOWING ALL STEPS AND DRAWING CASH FLOWS