Tool Makers, Inc. uses tool and die machines to produce equipment for other firms. The initial cost of one customized tool and die machine is $850,000.This machine costs $10,000 a year to operate. Each machine has a life of 3years before it is replaced. What is the equivalent annual cost of this machine if the required return is 9 percent?

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The equivalent annual cost EAC is the cost incurred in owning and operating a machine or equipment a... View the full answer