You are considering two alternative machines, Machine A and Machine B, for a manufacturing process. One of the machines, Machine A, costs $36,000 to set up and $7,000 per year to operate, but It must be completely replaced every 6 years, and it has no salvage value. Assuming the cost of capital is 10% what is the equivalent annual cost of the machine?

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To calculate the equivalent annual cost of Machine A we need to consider both the initi... View the full answer