You are considering the purchase of a nice home. It is in every way perfect for you and in excelled condition, except for the roof. The roof has only 5 years of life remaining. A new roof would last 20 years, but would cost $20,000. The house is expected to last forever. Assuming the costs will remain constant and that the interest rate is 5% what value would you assign the existing roof?

Note: the answer is $6,948, but I have no idea how to get to the answer, so a step by step solution would be lovely and would be rewarded full points :)