From Challenger Minimum EUAC Section:

1. Below are the projected costs of the initial construction and yearly maintenance of a large municipal swimming pool. Assume an interest rate of 8%. In what year should the pool be replaced. What is the minimum EUAC of the pool to the closest dollar and in what year does it occur?

Year	Cost
0	$325,000
1	$0
2	$11,000
3	$15,000
4	$37,000
5	$56,000
6	$78,000
7	$92,000
8	$97,000
9	$108,000
10	$115,000

Answers: Year pool to be replaced:_____, Minimum EUAC:__________ , Year of minimum EUAC:_____ <25 pts>

Reasoning/Work:

From Replacement Technique 1 Section:

2. An existing drill press has a salvage value now of $8000, which will fall to $6400 by the end of the year. The cost of lower productivity using this drill press is $4250 this year. A new-fangled drill press, being considered as a replacement, has the following salvage values and loss of productivity:

Year	Salvage	Productivity Loss
0	$19,200
1	$14,400	$0
2	$11,200	$1000
3	$8000	$2000
4	$4,800	$3000

Assume an interest rate of 15%. Calculate the EUAC for each year of the new-fangled drill press. Calculate the marginal cost of the existing drill press. In what year does the new-fangled drill press EUAC fall below the marginal cost of the existing drill press and what is the amount of the new-fangled drill press EUAC to closest dollar of that year?

Answers: Year new-fangled EUAC is less than Existings marginal cost: ____, EUAC in that year:___________ <25 pts>

Reasoning/Work: