A company hopes to fulfill a new contract, whose team essential was purchased 7 years ago with a previous contract, and with the following considerations: You will not have recovery costs Capital Remaining, Present Market Value: $ 70,000, Remaining Life 3 more years, there is no salvage value and the COA = $ 30,000 per year. The only options for the system are to replace it or keep it for the full 3 years you have left. The challenger system investigated has the following estimates of costs: initial cost of $ 750,000, 10 years of life, S = 0 and COA = $ 50,000 annually. Estimated your initial cost within 3 years it is $ 900,000, maintaining the annual $ 50,000 of COA. The company in case of keeping its equipment, after 3 years would buy the challenging system, for being the best in the market, which it would keep its full 10 years, using it in the future contract, which will recover the remaining 3 years of capital. A replacement analysis is requested for the fixed period of 10 years, applying the 10% rate.