Assume a machine costs $250,000 and lasts five years before it is replaced. The operating cost is $37,200 a year. Ignore taxes. What is the equivalent annual cost if the required rate of return is 13.5 percent? (Hint: the EAC should account for both investment and annual operating costs)

Answer rating: 100% (QA)

To compute the equivalent annual cost EAC you need to first find out the present value PV of the cos... View the full answer