3) You want to either replace or refurbish the elevator system in an office. Option 1 - Refurbishing: Refurbishing the elevators will cost $53,000 and extend the life of the elevators another 20 years. Salvage value at the end of 20 years will be $10,000. Annual maintenance costs will be $1,000 per year payable at the end of each period. Option 2 - Replacement: Replacing the elevator system will cost $120,000,

with an expected life of 45 years. Maintenance

costs will be $400 per year. Salvage value at the

end of 45 years will be $26,000. Interest is 8%. Which one is a better option for the organization ( Since two options have different lives, choose the best evaluating factor)

What is the worth of option 1?

What is the worth of option 2?