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2. A small compressor can be bought for $10,000. The salvage value is assumed to be negligible regard less of the replacement interval. Annual operating

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2. A small compressor can be bought for $10,000. The salvage value is assumed to be negligible regard less of the replacement interval. Annual operating and maintenance costs are expected to increase by $750/yr, with the first years cost anticipated to be $1,500. Using a MARR of 8%, determine the years at which replacement should take place. (Assuming replacement should take place at Year 1, calculate the annual equivalent of cost. Then, assuming replacement should take place at Year 2, calculate the annual equivalent of cost. Follow the steps to identify the relationship between replacement year and the annual equivalent of cost. The year that corresponds to the minimum annual equivalent cost should be the appropriate replacement year)

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