Problem $1$

A machine has a first $($capital$)$ cost of $$14,000.$ The repair costs are covered by the warranty in

year $1,$ then they increase by $$700$ per year. Assume an interest rate of $12\%.$

$($a$)$ Calculate the EAC for the first $10$ years of the machine's use, rounding to the nearest dollar.

$($b$)$ Identify the minimum EAC for this machine, and the year it occurs.

$($c$)$ Based on this value, according to the techniques we have learned, how many years should

the machine be used before it is sold?