Answers P1: The calculations indicate that 3 year-period is the most suitable before the company considers making replacements with new ones. This is because the 3rd years has the lowest Equivalent Annual Cost (EAC) P/S: EAC is the formula used to determine the optimum period to replace an asset EAC: It is the equivalent annual cash flows referring to the collective normal uneven cash flows that should be of equal val…
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