Question

Chapter 8 explains that price changes caused by inflation or deflation are an economic business reality that can affect the comparison of alternates. The focus underlies with incorporating price changes into before-tax and after-tax engineering economy studies. Chapter 9 expresses the importance in relation to a replacement study, compared to the best challenger with the defender. The best economic challenger is described as the one with the lowest AW of costs for some period of years. When a study period is specified, it is vital that market value and cost estimates for the defender be as accurate as possible. Briefly discuss what is meant by the concept of "defender" and "challenger."

Answer 1