Question: 1. The cost of conventional medications for diabetes has risen by an average of 13.1% per year over the past four years. During this same period of time, the cost of a specialty drug for rheumatoid arthritis (RA) has increased 22.5% per year. If these increases continue into the foreseeable future, in how many years will an RA medicine now costing $20 per dose be at least five times as expensive as a diabetes inhaler that now costs $10 per use?
2. XYZ rapid prototyping (RP) software costs $20,000, lasts one year, and will be expensed (i.e., written off in one year). The cost of the upgrades will increase 10% per year, starting at the beginning of year two. How much can be spent now for an RP software upgrade agreement that lasts three years and must be depreciated with the SL method to zero over three years? MARR is 20% per year (im), and the effective income tax rate (t) is 34%.