Question: At i = 10% per year, a machine has a first cost of $10,000 and estimated operating costs and year-end salvage values as shown. The

At i = 10% per year, a machine has a first cost of $10,000 and estimated operating costs and year-end salvage values as shown.

The annual equivalent cost if you operate the machine for 4 years is closest to which value?

Determine the economic service life.

Years Operating COst $/yr Salvage Value $
1 -1000 7000
2 -1000 5000
3 -1000 4200
4 -1000 3000
5 -1000 2000

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