Question: You are evaluating three different machines. Machine A costs 1 lakh to purchase and 10000 per year in maintenance costs. Its life is 10 years.

You are evaluating three different machines. Machine A costs 1 lakh to purchase and 10000 per year in maintenance costs. Its life is 10 years. Machine B costs 1.2 lakhs to purchase and 11,000 per year in maintenance costs. Its life is 14 years. Machine C costs 1.1 lakhs and 11,500 per year in maintenance costs. Its life is 18 years. Assuming that WACC is 12% and that you need these machines forever (you will repurchase the same machine when it breaks down), what is the effective annual cost for the cheapest machine? a. 26673 for Machine C b. 22458 for Machine B c. 26275 for Machine A d. 24289 for Machine C

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