VMIC Corp. has asked you to look at the following data. The interest rate is 10%.After considering
Question:
VMIC Corp. has asked you to look at the following data. The interest rate is 10%.After considering the data, answer questions (a)-(c).
Marginal EUAC If
Cost Data Kept n Years
Year, n Defender Challenger
1 $2500 $4500
2 2400 3600
3 2300 3000
4 2550 2600
5 2900 2700
6 3400 3500
7 4000 4000
(a) What is the lowest EUAC of the defender?
(b) What is the minimum cost life of the challenger?
(c) When, if at all, should we replace the defender with the challenger?
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