A special purpose NASA fuel cell requires an investment of $80,000 and has no MV at any time. Operating expenses in year k are given by C_k = $10,000+$6,000(k−1). Obsolescence is reflected in increased operating expenses and is equivalent to $4,000 per year—this expense has not been included in the equation for C_k
a. Determine the economic life of the fuel cell if i = 0%.
b. Repeat Part (a) when the $4,000 per year is ignored. What can you conclude about the influence of an expense that is constant over time on the economic life?