Question: Defender: Current trade-in (re-sale) value = $5,000, decreasing at an annual rate of 20% from the previous years value O&M = $1000 in year 1,

Defender:

  • Current trade-in (re-sale) value = $5,000, decreasing at an annual rate of 20% from the previous years value
  • O&M = $1000 in year 1, increasing by $500 per year

Using Marginal analysis find the Marginal Cost of keeping the machine for the 2nd year. MARR = 10%

a)

2680 - 2720

b)

2720 - 2760

c)

2760 - 2800

d)

2800 - 2840

e)

2840 - 2880

f)

None of the above

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