Question: You are considering two alternative machines, Machine A and Machine B, for a manufacturing process. One of the machines, Machine A, costs $40,000 to set

You are considering two alternative machines, Machine A and Machine B, for a manufacturing process. One of the machines, Machine A, costs $40,000 to set up and $6,000 per year to operate, but It must be completely replaced every 7 years, and it has no salvage value. Assuming the cost of capital is 8.7%, what is the equivalent annual cost of the machine?

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