An asset purchased 2 years ago for 40000 is harder to maintain than expected. It can be sold now for 12000 or kept for a maximum of 2 more years,in which case its operating cost will be 20000 each year, with a salvage value of 9000 two years from now. A suitable challenger will have first cost of 60000 with an annual operating cost of 4100 per year and a salvage value of 15000 after 5 years.