The equivalent annual cost for a machine that requires a $100,000 investment at time-period zero, and...
The equivalent annual cost for a machine that requires a $100,000 investment at time-period zero, and a $10,000 annual expense each of the next 5 years, if the opportunity cost of capital is 10%, is?
Homework Answers
Equivalent Annual cost = Annual cost + Initial Investment/Present value Annuity factor
= 10,000 + 100,000/PVAF(10%, 5 years)
= 10,000 + 100,000/3.7908
= $36,379.66
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The equivalent annual cost for a machine that requires a
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