VMIC Corp. has asked you to look at the followingdata. The interest rate is 10%
Year,n |
Marginal Cost Data Defender |
EUAC if Kept n years Challenger |
1 |
$2,500.00 |
$4,500.00 |
2 |
$2,400.00 |
$3,600.00 |
3 |
$2,300.00 |
$3,000.00 |
4 |
$2,550.00 |
$2,600.00 |
5 |
$2,900.00 |
$2,700.00 |
6 |
$3,400.00 |
$3,500.00 |
7 |
$4,000.00 |
$4,000.00 |
(a) What is the defender's lowest EUAC?
(b) What is the challenger's minimum cost of life?
(c) When, if at all, should we replace the defender withthe chalenger?