A new condensate-recovery system is being considered to replace an antiquated sy

Question

A new condensate-recovery system is being considered to replace an antiquated system at Arun Tech.  It is estimated that the new system will cost $600,000 to install now.  However the old antiquated system may be fixed at a cost to last for another two years.  If the new system is delayed for another two years, it could be bought and installed at the same cost of $600,000.  The company is in a budget squeeze and having problems finding the money now for the new system and is therefore considering a two year delay for the installation of the new system.  If money is worth 15%, how much can the company afford to spend to fix the old system to be functional for two more years?

A)$222,500

B)$146,340

C)$0

D$193,200

Explanation / Answer

B)$146,340

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