Famed gamer Tyler ‘Ninja' Blevins is considering whether to replace his aging game console or to spend money on updating it. The replacement console would cost $7,500 now and would need software updates of $700 to be paid at the end of every year for 8 years. At the end of 8 years, the replacement console can be salvaged for $3,500. The existing game console needs increasing amounts of software updates each year, and its salvage value is falling, as shown below.

Year	Maintenance	Salvage
Now	$0	$2,400
1	$1,800	$1,200

(The existing console can be sold for $2,400 now. If it is sold in 1 year, the price will be $1,200. If the existing console is used between t = 0 and t = 1, a software update costing $1,800 must be paid at t=1.)

Tyler Blevins faces an opportunity cost of capital of 16%.

Expressed in Year 1 dollars, operating the old game console from t = 0 to t =1 would cost Tyler Blevins _______ more than operating the new game console from t = 0 to t = 1 .

multiple choice

• $614

• $2,069

• $1,372

• $1,203

• $253