How much annual lease amount of the challenger can increase

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Question: 1. In a replacement analysis for a vacuum seal on a spacecraft, the following data are known about the challenger: the initial investment is $12,000; there is no annual maintenance cost for the first three years, however, it will be $2,000 in each of years four and five, and then $4,500 in the sixth year and increasing by $2,500 each year thereafter. The salvage value is $0 at all times, and MARR is 10% per year. What is the economic life of this challenger?

2. Determine how much the annual lease amount of the challenger can increase before the defender becomes the preferred alternative.

Reference no: EM131506802

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