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Three years ago a chemical processing plant installed a system at a cost of $ 2 0 , 0 0 0 to remove pollutants from
Three years ago a chemical processing plant installed a system at a cost of $ to remove pollutants from waste water that is discharged into a nearby river. The present system has no present salvage value and will cost $ to operate next year, with the operating cost expected to increase at the rate of $ per year thereafter.
A new system has been designed to replace the existing system at a cost of $ The new system is expected to have first year operating of $ with these costs increasing at the rate of $ per year. The new system is estimated to have a useful life of years. The salvage values of both the system at any future time are expected to be zero. If the interest rate is conduct replacement analysis based on the economic life of the asset.
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