Express, Inc., is considering replacing equipment. The following data are available:

Old Equipment Replacement Equipment

Original cost $40,000 $31,000

Disposal value now $7,000 0

Disposal value in 5 years 0 0

Annual cash operating costs $7,900 $7,000

What are the total relevant costs of keeping the old equipment?

• $39,500.
• $7,000.
• $40,000.
• $9,000.