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Anderson Department Stores is considering the replacement of the existing elevator system at its downtown store. A new system has been proposed that runs faster than the existing system, experiences few breakdowns, and as a result promises considerable savings in operating costs. Information on the existing system and the proposed new system follow: Category Existing System New System Original cost $300,000.00 $875,000.00 Remaining life 6 years 6 years Annual cash operating costs $150,000.00 $8,000.00 Salvage value at present $100,000.00 Salvage value in 6 years $25,000.00 $100,000.00 a. What costs are not relevant for this decision? b. What are the relevant costs?

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