Your company has a choice between replacing vs$.$ repairing a used piece of equipment. Repair would cost $$20,000$ and would make the equipment usable for the next five years, with a salvage value of $$5,000$ at that time. If you instead sell the equipment now, you believe you could get $$15,000$ for it$.$ A replacement would cost $$100,000,$ and would be usable for $20$ years, with no salvage value at that time.

You estimate that the old repaired equipment would have higher operating costs than a new machine, by an amount of $$3,000$ per year. Assume that your minimum acceptable rate of return is $10\%$ per year before taxes. Which option would you recommend? Solution: repairing is better with annual worth of $$11,413\mathrm{.}92.$

Hint: Use Annual Worth analysis and solve using Excel.

Note: You have the option to submit your Excel file for this question, or you can take screenshots of parts of the Excel file and explain them. If you choose to use screenshots, please ensure that you also include the formulas you used in Excel. To show the formulas, you can use a specific function in Excel that reveals them $($see below$).$