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A straightforward technique for optimum (minimum cost) design of digital radio relay systems is given. The same technique with small modifications is also applied to analog FDM-FM systems. The total cost of a multihop radio relay system including transceiver, antenna, feeder, and mast expenses is considered by developing the cost functions for different component parts, i.e., the dependence of component price on the performance. After this the required component performances are derived based on the system specifications and the assumed mathematical model of propagation. Thus, the total cost can be minimized to get the optimum hop length and cost balance between transmitter, receiver, antenna, and mast. To illustrate the approach in a practical situation, calculations are carried out for a medium capacity digital and analog system.