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Question 2: Replacement Decisions (16.75 marks) Kingston Transit is considering replacing a high-pressure bus washing machine with a newer and more efficient one. A new machine will have an estimated service life of 10 years, a first cost of $12,000 and an installation cost of $500. The combined operating and maintenance costs start at $1,250 in the first year and will increase by $390 each y thereafter. There will also be a periodic maintenance overhaul every three years costing $300. Salvage value is estimated to decline by 20% each year. The city uses a MARR of 25% for this type of investment. what is the minimum EAC? And in what year should the machine be replaced? ear