. Equipment Replacement. Merle Murphy, owner of Murphy Farms, is considering plans to rent a new sprinkler system for his navy bean business. He currently uses a system that rents for \(\$ 20,000\) per year and has annual operating costs of \(\$ 10,000\) plus \(\$ 100\) per acre. The new system will rent for \(\$ 10,000\) per year and have annual operating costs of \(\$ 30,000\) plus \(\$ 40\) per acre. Both systems will perform the same function. He will plant 200 acres of beans. The 1998 contribution margin from beans is estimated to be \(\$ 100,000\).

Required:

Should Murphy change to the new system? Explain your conclusion.