Question: A new machine tool cost $ 15,000 and has a $5000 salvage value at the end of 5 yrs. The interest rate is 10%. The

A new machine tool cost $ 15,000 and has a $5000 salvage value at the end of 5 yrs. The interest rate is 10%. The annual cost of capital recovery is the annual depreciation charge (use straight-line depreciation) plus the equivalent annual interest charge. Work this out on a year-by-year basis and show that it equals the number obtained quickly by using the capital recovery factor.

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