Ans: The equivalent annual cost is $113.60 or $114
Explanation:
Equivalent Annual Cost = P ( A/P , i , n ) - F ( A/F , i ,n )
= $1000 ( A/P , 5% , 10 ) - $200 ( A / F , 5% , 10 )
= $1000 ( 0.1295 ) - $200 ( 0.0795 )
= $129.5 - $15.90
=$113.60
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