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4. REPLACEMENT ANALYSIS (10 pts) Machine A was purchased three years ago for $10,000 and had an estimated market value of $1,000 at the end of its 10-year life. Annual operating costs are $1,000. The machine will perform satisfactorily for the next 7 years. A salesperson for another company is offering machine B for $12,000 with a market value of $5,000 after 7 years. Annual operating costs will be $600. Machine A could be sold now for $7.000 and MARR is 12% per year. Should you buy the new machine? Use Annual Worth method. Write a brief interpretation of your answer. 5. B/C RATIO (15 pts) The city council of Morristown is considering the purchase of one new fire truck. The options are Truck X and Truck Y. the appropriate financial data are as follows: Truck X Truck Y Capital investment $50,000 $64,000 Annual Maintenance expenses $6,000 $5,000 Annual Reduction in fire damage $20,000 $22,000 Life in years 6 6 The purchase is to be financed by money borrowed at 10%. Which truck is recommended using B/C ratio method