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Alpha software is considering replacing one of their computer servers with a newer model, the current model in question is now worth $1,200,000 {future market
Alpha software is considering replacing one of their computer servers with a newer model, the current model in question is now worth $1,200,000 {future market values is forecasted to drop by 20% per year). If kept the current server system will require an immediate overhaul that costs $200,000. The operation cost of this server is $1'?0,000 for the rst year and will increase by 33% aerwards. A new server model is available which has a 10 years of service life, costs $2,500,000 with 0&M costs of $120,000 for the 13\" year which increases by 32% for subsequent years. The new server's [challenger's) market value will drop 25% per year through its service life. Knowing that the company's MARE is 10% A] Plot totalAE cost (uniform annual equivalent cost) vs useful life for the defender as well as the challenger up lo 10 years. B] Find the economic lives oflhe defender d: the challenger. C] Determine iwhen the defender should be replaced within 10 years
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