Question5 A firm is considering replacing a machine that has been used for making a certain kind of packaging material. The new improved machine will cost $30,000 installed and will have an estimated economic life of 10 years with salvage value of S1500. Operating costs are expected to be $1500 per year throughout its service life. The old machine in use had an original cost of $27,000 four years ago, and at the time was purchased, its service life (physical life) was estimated to be 7 years with salvage value of $4,000. The old machine has a current market value of $7300. If the firm retains the old machine further, its updated market values and operating costs for the next 4 years will be as follows: Year End rating Cost Market Value 7300 4300 3300 1100 3200 3700 4800 5850 4 The firm's minimum attractive rate of return is 10% (a) Working with the updated estimate of market values and operating costs over the next years, determine the remaining economic life of the old machine. (b) Determine whether it is economical to make the replacement now