The table below contains the calculated annual equivalent cost for a defender an
ID: 1096781 • Letter: T
Question
The table below contains the calculated annual equivalent cost for a defender and a challenger based on the market value and the maintenance cost:
Which of the following statements are true? Select all that apply.
The economic life of the defender is 2 years
The economic life of the challenger is 4 years.
The economic life of the defender is 4 years.
The economic life of the challenger is 7 years.
The annual equivalent cost of the defender is greater than the annual equivalent cost of the challenger.
The annual equivalent cost of the challenger is greater than the annual equivalent cost of the defender.
The defender should be replaced now.
The defender should not be replaced now.
EOY DefenderAEC Challenger
AEC 0 $21,114 $25,557 1 $20,019 $24,210 2 $16,560 $23,110 3 $18,538 $20,348 4 $21,993 $18,085 5 $22,617 $25,971 6 $23,174 $26,533 7 $25,331 $28,758
Explanation / Answer
The economic life of the defender is 2 years because thereafter the annual cost is increasing.
The economic life of the defender is 4 years because thereafter the annual cost is increasing.
The annual equivalent cost of the challenger is greater than the annual equivalent cost of the defender.
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