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Question 13.5: Let us look again at the defender and challenger assets in E...

Let us look again at the defender and challenger assets in Example 13-4.This time let us arbitrarily change the defender’s marginal costs for its 5-year useful life. Now when, if at all, should the defender be replaced with the challenger?

Year, n Defender TotalMarginal Cost in Year n
1 $16,000
2 14,000
3 13,500
4 15,300
5 17,500
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