Sarthaks Test
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A machine costs Rs. 8,000. Its maintenance cost and resale value per year are given

Determine the optimal replacement age of the machine.

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Given: P = 8000, the given data can be written as bellow:

From the above table the A(n) – Annual average maintenance cost is minimum for the year n = 5 is the optimal replacement age of the machine. A(5) = Rs. = 2976.

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