system will perform satisfactorily over the next 5 years, while the new system has 12 years useful life. The following
estimates have been developed for both the defender and the challenger:
Defender
RM
Challenger
RM
Current MV
40,500
Purchase price
61,000
Required upgrade
2,700
Installation cost
5,000
Annual expenses
1,900
Annual expenses
1,200
MV at end of
-1,800
useful life
MV at end of useful
life
8,900
Using the Strightline method, Calculate Book value for end of the year 5 and 7, and book valur for
year 4