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Great Enterprises is analyzing a machine that costs of $285,000, has annual operating costs of $8,500,...

Great Enterprises is analyzing a machine that costs of $285,000, has annual operating costs of $8,500, and has a 3-year life. The company requires a 13 percent rate of return. The machine will be replaced at the end of its useful life. What is the effective annual cost of this machine?

A. $129,204

B. $139,892

C. $149,282

D. $178,109

E. $189,677

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Answer #1

Solution: 129,204 EAC=(Initial investmetn/PVIFA(R%,n))+ annual Operating cost (285000/2.36115)+8500 **Factor working PVIFA(R%

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