Replace an existing asset: Bell Mountain Vineyards is considering updating its current manual accounting system with a highend electronic system. While the new accounting system would save the company money, the cost of the system continues to decline. Bell Mountain’s opportunity cost of capital is 10 percent, and the costs and values of investments made at different times in the future are as follows:

When should Bell Mountain buy the new accounting system?

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Value of Future Savings (at time of purchase) Year Cost 0 $5,000 $7,000 1 4,500 7,000 2 4,000 7,000 3 3,600 7,000 4 3,300 7,000 5 3,100 7,000