One of the four ovens at a bakery is being considered for replacement. Its salvage value and maintenance costs are given in the table below for several years. A new oven costs $80,000 and this price...

Extracted text: One of the four ovens at a bakery is being considered for replacement. Its salvage value and maintenance costs are given in the table below for several years. A new oven costs $80,000 and this price includes a complete guarantee of the maintenance costs for the first two years, and it covers a good proportion of the maintenance costs for years 3 and 4. The salvage value and maintenance costs are also summarized in the table. Both the old and new ovens have similar productivities and energy costs. If the MARR equals 10%, which one of the following statements is true? Old Oven Salvage value at the end of Year Operating and Maintenance the year cost $20000 1 $17000 $6487 $14000 $11000 $7,000 $6587 $6687 4 $6687 New Oven Salvage value at the end of the year Year Operating and Maintenance cost $80000 1 $76000 $70000 3 $66000 $1000 4 $62000 $3000 Do not replace at all; economic service life of the challenger is 1 year. O Replace now; economic service life of challenger is 3 years. O Replace at the end of year 1; economic service life of challenger is 4 years. Not enough information to determine replacement period, economic service life of challenger is 1 year.