Depreciation amount every year = 5,000 / 10 => $500 per year.
Annual fees paid by student = $500 per year.
Hence at year 8 end breakeven will happen if the department is able to recover its entire cost (depreciation amount). As in this case
Amount of Cost (Depreciation) = Fees paid by student.
Therefore at year 8 end, it should be able to sell its machine at minimum of machine's book value in order to remain break even.
Hence Value of "S" = Book Value at EOY 8 = 5000 - (500*8)
=> 1,000 is the value of "S".
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