Aztec, a Manufacturer of Hard Board and Fiber Cement Sidings

Aztec, a manufacturer of hard board and fiber cement sidings and panels, purchased equipment for its new product line 9 years ago at a cost of $43,000. The asset has a market value of $17,700, if it were sold now. The current asset is expected to provide adequate services for another 3 years, given that the annual maintenance costs of $7250 is provided. It is estimated that, if the current asset is continued in service, its final market value will be
$9600 three years from now. However, due to changing customer needs, a new piece of machinery is being considered for the product line. The company can purchase the new equipment at a cost of $51,000 and a $540 salvage value at the end of 15- year economic life. The new equipment has annual maintenance costs of $5250. The SL method with a
15- years life and zero market value is used to write off both assets. Determine whether replacement now is economical based on an after- tax annual worth analysis with an effective tax rate of 38% and an after- tax MARR of 2% per year.