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A company makes an initial investment for an asset equal to $10,000. The salvage value is reduced by 20% each year, so that it will

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A company makes an initial investment for an asset equal to $10,000. The salvage value is reduced by 20% each year, so that it will be $8,000 at the end of year 1, $6, 400 at the end of year 2, and $5, 120 at the end of year 3. The operating cost for the asset in year 1 is $1,000, in year 2 it is $2,000, and in year 3 it is $3,000, if it were kept that long. The company wants to know how long to keep the equipment (i.e., how frequently to turn it in for a new asset.) It uses the Equivalent Uniform Annual Cost (EUAC) method (Constant value A) to make a decision, assuming an annual interest rate of 10%. Which option, keeping it for 1, 2, or 3 has the lowest EUAC and what is that EUAC

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