1. The economic Service life of an asset is:

a. The number of years “n” at which the AW of cost of the asset is at a minimum.

b. The time when the operating cost is at a minimum.

c. The time when the salvage value goes below 25% of the first cost.

d. The length of time required to recover the first cost of the asset.

2. In a one-year later replacement analysis, if all estimates are still current and the year is not ND, the action that should be taken is:

a. keep the defender until its market value is equal to the estimated salvage value of the challenger

b. replace the defender with the challenger

c. look for a new challenger and calculate its AW

d. keep the defender one ore year and repeat the same analysis next year

Please explain me why you picked the answer.