Question: Two systems are under consideration. The relevant costs for each system are known or estimated (see table below). Use an interest rate of 8% per

Two systems are under consideration. The relevant costs for each system are known or estimated (see table below). Use an interest rate of 8% per year to determine the minimum resale price (RV) needed to make the challenger a better economic choice now.

Calculations based on interest factors with 5 decimal places.

	Current	New
	System	System


Remaining life, (years)	5
Current market value, ($)	50,000
AOC, ($ per year)	100,000
Future salvage, ($) AW New System, ($ per year)	0	-195,000

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