Machine A costs $1,520,000 to buy and install and costs $48,000 per year to operate. The machine has a five-year useful life and zero salvage value. The required return is 15.5%. What is the equivalent annual cost of Machine A? (Answer: $506,819)
Machine A costs $1,520,000 to buy and install and costs $48,000 per year to operate. The machine has a five-year useful life and zero salvage value. The required return is 15.5%. What is the equivalent annual cost of Machine A? (Answer: $506,819)
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Machine A costs $1,520,000 to buy and install and costs $48,000 per year to operate. The machine has a five-year useful life and zero salvage value. The required return is 15.5%. What is the equivalent annual cost of Machine A? (Answer: $506,819)
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