Question: 1. Suppose the study period is reduced to five years. Will this change the replacement decision?
2. Before committing to a 10-year lease, it was decided to consider one more alternative. Instead of simply augmenting the existing generator with a new 40-kW unit, this alternative calls for replacing the 80-kW generator with two 40-kW units (for a total of three 40-kW units). The company selling the 40-kW units will reduce the purchase price to $120,000 per generator if three generators are bought. How does this new challenger compare to the augmented defender and the original challenger?