Engineering Economy 7th Edition by Leland Blank ,Anthony Tarquin

Exercise 51

Hydrochloric acid, which fumes at room temperatures, creates a very corrosive work environment, causing steel tools to rust and equipment to fail prematurely. A distillation system purchased 4 years ago for $80,000 can be used for only 2 more years, at which time it will be scrapped with no value. Its operating cost is $75,000 per year. A more corrosion-resistant challenger will cost $220,000 with an operating cost of $49,000 per year. It is expected to have a $30,000 salvage value after its 6-year ESL. At an interest rate of 10% per year, what minimum replacement value now for the present system will render the challenger attractive