A company has to buy a new gadget maker and must choose between 2 options.

The first gadget maker costs $400,000, and will need maintenance of $225,000 at the end of the fifth year. The salvage value after 10 years will be $175,000.

The second option costs $250,000 and will require annual maintenance of $30,000 each year for 10 years. At the end of 10 years, the salvage value will be $75,000.

Which gadget maker should the firm select if interest is 8.5% compounded annually?

*Can you please show formulas used.