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Question: A special purpose NASA fuel cell requires an investment of $80,000 and has no MV at any time. Operating expenses in year k are given by Ck = $10,000 + $6,000 (k - 1). Obsolescence is reflected in increased operating expenses and is equivalent to $4,000 per year-this expense has not been included in the equation for Ck.

a. Determine the economic life of the fuel cell if i = 0%.

b. Repeat Part (a) when the $4,000 per year is ignored. What can you conclude about the influence of an expense that is constant over time on the economic life?

Microeconomics, Economics

  • Category:- Microeconomics
  • Reference No.:- M92315533

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