How to solve this question:

A new laptop has just come onto the market that you estimate will have an equivalent annual cost of $500. You could sell your current laptop right away for $1,000, or you could spend $500 on an upgrade. At the end of this year, after the upgrade, it will have a resale value of $800, going down by $200 a year. Once its salvage value reaches zero, its physical life is over. If both laptops provide equivalent functionality, when should you replace your current laptop? Your MARR is 5%.

Replace it in 5 years.

Replace it now.

Replace it in 3 years.

Replace it in 2 years.