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Junior Bakeries is considering to replace its baking system and either buying or leasing a new system. Operating and maintaining the old system costs $

Junior Bakeries is considering to replace its baking system and either buying or leasing a new system. Operating and maintaining the old system costs $32,000 annually, it has a
remaining life of 8 years, and an estimated salvage value of $5,000 at that time.
Junior Bakeries can buy a new system for $250,000; it will be worth $25,000 in 8 years; and it will have annual operating and maintenance costs of $18,000. If they decide to buy the
new system, they will traded-in the old system for $20,000.
Leasing a new system will cost $26,000 per year, and they will need to make this payment at the beginning of the year, plus operating costs of $9,000? year, which are to be paid at
the end of the year. If the new system is leased, they will sell the old system for $10,000.
With an MARR of 15% and an 8 year planning horizon, determine the minimal EUAC given the options of: 1) keeping the existing system; 2) purchasing a new system; or 3) leasing a
new system?
Note: Use the cash flow approach.
buying new: $17,270.13
keeping current system: $31,635.75
buying new: $50,189.02
leasing new system: $38,900.00
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