An Engineering company is considering purchasing a piece of
plant equipment and wishes to compare its replacement strategies
for purchase and maintenance over a period of time. The machine’s
initial cost is $170,000 with immediate payment required. Running
Costs including maintenance are $12,000 in year 1, $17,000 in year
2, $24,000 in year 3 and $33,000 in year 4. Payments are required
at the end of each year. Interest rates are 4% p.a. The equipment
will have a salvage value...