HB Ltd operates a fleet of identical vehicles. It is appraising how often to replace the vehicles. You should assume the

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HB Ltd operates a fleet of identical vehicles. It is appraising
how often to replace the vehicles. You should assume the company
will replace each vehicle with an identical one at each
replacement, indefinitely. Information below shows the present
value of costs for each vehicle depending on whether vehicles are
kept for 1 year, 2 years or 3 years. Period of time each vehicle is
kept for Present value of costs per vehicle £ 1 year 14,660 2 years
21,960 3 years 33,570 The cost of capital is 8%. What is the
optimum replacement cycle?
a. Replace every 3 years.
b. Replace either every 2 years or every 3 years, as,
financially, the outcome is the same.
c. Replace every 2 years.
d. Replace every year.