Explain this problem and make an explanation how the problem is solved.

Also, explain this equation. How will I type it in Excel? or calculator?

REPLACEMENT VALUE EXAMPLE An asset purchased 2 years ago for $40,000 is harder to maintain than expected. It can be sold now for $12,000 or kept for a maximum of 2 more years, in which case its operating cost will be $20,000 each year, with a salvage value of $10,000 at the end of year two.A suitable challenger will have an initial cost of $65,000, an +18,000(AF10%,5) annual cost of $15,000, and a salvage value of $18,000 after its 5 year life. Determine the RV of the defender that will render its AW equal to s that of the challenger, using an interest rate of 10% per year. Recommend a course of action. SOLUTION .-.RV(A/P 10%,2) _ 20,000 + 10,000(A/F 10%,2) ?-65,000(AR 10%5)-15,000 RV-$24,228 Thus, if market value of defender $24,228, select challenger