where D8 is equal to 4

Question 5 A 3-year-old machine purchased by HKCC Company for $200,000 is getting old and unable to meet today's market demands. The machine can be upgraded now for $(80,000 + D8 x 1,000) or sold for $(40,000 + D8 x 1,000). The current machine will have an annual operating and maintenance (O&M) cost of $100,000 and a $(30,000 + D8 x 1,000) salvage value in 3 years. If upgraded, the old machine will be retained for only 3 more years, then replaced with a new machine. The replacement machine, which can serve the company now and for at least 8 years, costs $(200,000 + D8 x 1,000). In addition, there are shipping and handling charges of $20,000. Its salvage value will be $(40,000 + D8 x 1,000) for years 1 through 4; $(20,000 + D8 x 1,000) after 5 years; and $(10,000 + D8 x 1,000) thereafter. It will have an annual operating and maintenance cost of $65,000 per year. HKCC Company wants to perform an economic analysis at 15% per year using a 3-year planning horizon. (b) Compare the Capital Recovery (CR) for the replacement machine (challenger) over the study period of 3 years and an expected life of 8 years. Use 4 decimal places of the compound interest factors to do your calculation. Show detailed steps of your replacement analysis. (Correct your final answer to integer.) (6 marks)