Due to anticipated uctuations in costs and equipment resale values, the total marginal cost data for

a grouping of defender machines over the next ve years is:

Year 1 2 3 4 5

Total Marginal Cost ($1000s) 100 120 50 80 250

a) What replacement technique is recommended if there is a challenger asset being considered to replace the machine grouping?

Answer: <2 pts>

Reasoning/Work:

b) Find the defenders EUAC (use i = 10%) for each, to closest $thousands, of the next 5 years by completing the table below :

Year N	Total Marginal Cost	EUAC ($1000s) if Kept (N) Years
1
2
3
4
5

Answer: <10 pts>

Reasoning/Work:

c) What is the economic life of the machine grouping?

Answer: <2 pts>

Reasoning/Work:

d) If challengers asset has a minimum EUAC of $110,000, when might the defender be reasonably replaced?

Answer: Use this format: ______ of year ______ <2 pts>

Where for the first blank, your choices are beginning, middle, at any point, or end.

Reasoning/Work: