Determine challenger minimum cost of life

Reference no: EM1381271

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?

Reference no: EM1381271

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