Question: Question 1 . For the basic age replacement model, consider a piece of equipment that costs $ 1 8 , 0 0 0 to replace.

Question 1. For the basic age replacement model, consider a piece of equipment that costs $18,000 to
replace. The total maintenance costs for five years of operation are estimated to be $2,400. Assuming a
linear maintenance cost rate, find the value of a and the optimal age at which the equipment should be
replaced

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