system will perform satisfactorily over the next 5 years, while the new system has 12 years useful life. The following estimates have been developed for both the defender and the challenger: Defender RM Challenger RM Current MV 40,500 Purchase price 61,000 Required upgrade 2,700 Installation cost 5,000 Annual expenses 1,900 Annual expenses 1,200 MV at end of useful life -1,800 8,900 MV at end of useful life Using the Strightline method , Calculate Book value for end of the year 5 and 7, and book valur for year 4