Contemporary Engineering Economics 6th Edition by Chan Park

Exercise 45

General Foods Company is considering replacing an old food dispenser which was purchased 10 years ago at a cost of $25,000. It has a current market value of $4,000. If the firm spends $1000 to recalibrate the dispenser, it would extend the life of the dispenser for another three years with following estimated market values and operating costs:
A computer-controlled new dispenser can be installed for $12,000. This dispenser would have an estimated economic life of 5 years, with an annual equivalent cost of $5,900. (Note that I calculated the economic service life of the challenger here.) The firm's MARR is 12%. Ignore any income tax effects for this problem.
(a) What is the remaining economic service life of the old machine with overhaul
(b) What is your decision - replace the defender now
(c) In (b), if now is not the right time to replace the defender, when to replace it
(d) In order to reach the conclusion in (c), what assumption(s) do you need in your replacement analysis