1.J&E Fine wines recently bought a new grape press for $150,000. The annual operating and maintenance costs for the press are estimated to be $7,500 the first year. These costs are expected to increase by $2,200 each year after the first. The salvage value is expected to decrease by $25,000 each year to a value of zero. Using an interest rate of 8%, determining the economic life of the press.

2. Should NewTechs computer system be replaced this year? The system has a salvage value now of$5,000, which will fall to $4,000 by the end of the year. the cost of the lower productivity link to the older computer is $3,000 this year. NewTech uses an interest rate of 15%. what is the cost advantage of the best system? A potential new system cost $12,000 and has to following salvage value and lost productivity for each year.:

year S lost productivity

0 12,000

1 9,000 0

2 7,000 1,000

3 5,000 2,000

4 3,000 3,000