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The army is attempting to determine the optimal replacement age for a piece of field equipment The equipment costs $280000 to replace The manufacturer will supply a rebate toward the next purchase

The army is attempting to determine the optimal replacement age for a piece of field equipment. The equipment costs $280,000 to replace. The manufacturer will supply a rebate toward the next purchase that declines at a rate of 20 percent per year. Maintenance costs for the first year are estimated to be $1,000, and they increase roughly at the rate of 18 percent per year. Estimate the number of years that the army should hold the equipment before making a replacement.

Jul 27 2020 View more View Less

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