Your company uses the same large electric drive motor at several locations in its electric power generating plants. A new motor, which is much more efficient, is available. The market price of the new model is $70,000. Assume the following:

- Analysis period is 9 years.

- General inflation rate is 3%.

- The increase rate on annual savings in operating expenses is 5 % per year. Assume any savings in year one would escalate at this rate therafter.

- MARR = 10% per year (does not include inflation component.i.e. it is inflation-free interest rate) -

Base time period is year zero.

What would the annual savings in year one need to be per motor to break even?