Upper Hutt Bakery Warehouse uses specialized ovens to bake its bread. One oven costs $1,000,000 and...

 

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Upper Hutt Bakery Warehouse uses specialized ovens to bake its bread. One oven costs $1,000,000 and lasts about 4 years before it needs to be replaced. The annual operating cost per oven is $10,000. What is the equivalent annual cost of an oven if the required rate of return is 15 percent? Upper Hutt Bakery Warehouse uses specialized ovens to bake its bread. One oven costs $1,000,000 and lasts about 4 years before it needs to be replaced. The annual operating cost per oven is $10,000. What is the equivalent annual cost of an oven if the required rate of return is 15 percent?

Answer rating: 100% (QA)

To find the equivalent annual cost EAC of an oven we need to calculate all the costs associate... View the full answer