Bloggs Engineering has recently carried out a detailed cost analysis of its machinery. Having studied past records of the maintenance costs and depreciation of its machines, the company has found that for a machine with a capital cost =$10,000, the maintenance cost and resale value at the end of year '' of its life can be expressed by the following formulae:Maintenance cost =0.08(1.2ⁿ+2), Resale value = / o(1.5+2) Bloggs Engineering wants to find the optimum replacement time for the machines over a period of eight years, given that the annual cost of capital is 10%.In what year should the machine be replaced?
a. 5
b. 7
c. 4
d. 6
