You are required to evaluate two systems. The cost of a usedsystem is $75,000. Through a new system, labor hours can bedecreased by 20% as compared to the used system. The cost of a newsystem is $150,000. Both systems have a useful life of five years.According to estimations, the market value of the used system willbe $20,000 in five years, and the market value of the new systemwill be $50,000 in five years. The used system has to operate 8hours per day for 20 days per month. If labor costs $40 per hourand the MARR is 1% per month, which system should berecommended?
