Assume a machine costs $598,000 and lasts eight years before it is replaced. The operating cost is $119,600 a year. Ignore taxes. What is the equivalent annual cost if the required rate of return is 13 percent? (Hint: the EAC should account for both initial investment and annual operating costs)

Answer rating: 100% (QA)

To calculate the equivalent annual cost EAC of the machine we need to consider both the initial inve... View the full answer