Multiple Choice:
A high-tech company purchases a new computing system whose initial value is V. The system will depreciate at the rate f = f(t) and will incur maintenance costs at the rate g = g(t), where t is the time measured in months. The company wants to determine the optimal time to replace the system.

Question

anonymous · Answer

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anonymous · Answer

Anyone? I really need help in this one

campbell_st · Answer

well the depreciation will be something like   
$$D=v(1 - f)^t$$

V= initial value and 

f= rate of depreciation   
 t = number of months... 

so if V = $10000 and  f = 5% per month... the 

After 1 month the  value is D = 10000 x (1-0.05) of  10000x0.95... 

After 10 months      D = 10000 x(1-0.05)^10

the optimum will be the point(s) of intersection of Maintenance costs and and Depreciation

In the graph below I've assumed maintenance is linear

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