N3

The following graph gives the: Equivalent uniform annual cost Annual operating and maintenance cost Capital recovery cost for a large piece of equipment, as functions of the life of the equipment, or how many years the equipment is kept in service. For example, if the equipment is kept in service for O years, then annual O&M is $0/year, as shown by point (a). If equipment is kept in service for 7 years, the capital recovery cost is $1700/year, as shown by point (d).The points on the graph are (0 years, $0/year) (3 years, $4000/year) (4 years, $2100/year) (7 years, $1700/year) What is the optimum replacement interval for the equipment?