Reference no: EM131115321
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.
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