The initial investment for the construction of a heating system is $1,000,000, this will take a year to be ready to operate, while the system is being built the old one needs to be kept working, the annual operating cost of this old system is $150,000. If the implementation of the new system is sucssesful it would save you $100,000 per year starting the second year.
For this analysis consider a period of 8 years since that is the remaining service life of the old system.
Interest rate is 3.5% compounded annualy.
What would be the value at the 8 year mark for the new system.