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5. Item A is currently in use at a plant. Its maintenance cost is $400 this year, increasing each year by $30. Items A can
5. Item A is currently in use at a plant. Its maintenance cost is $400 this year, increasing each year by $30. Items A can be replaced by Item B which has a current cost of $3,500. Item B has no annual maintenance costs, and the item cost increases by $50 per year. Disregarding income taxes effects (such as depreciation), find the optimum year to schedule a replace of Item A with Item B. Use 10% as the interest rate', which is the time value of money to this company. 5. Item A is currently in use at a plant. Its maintenance cost is $400 this year, increasing each year by $30. Items A can be replaced by Item B which has a current cost of $3,500. Item B has no annual maintenance costs, and the item cost increases by $50 per year. Disregarding income taxes effects (such as depreciation), find the optimum year to schedule a replace of Item A with Item B. Use 10% as the interest rate', which is the time value of money to this company
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