"Machine A costs $27,000 to purchase and is worth $9,000 in 4 years at the end...

50.1K

Verified Solution

Question

Finance

"Machine A costs $27,000 to purchase and is worth $9,000 in 4years at the end of its service life. Machine B costs $20,000 topurchase and is worth $1,000 in 4 years at the end of its servicelife. Assume that these machines are needed for 4 years (requiredservice period). Each machine can be repurchased at the same pricein the future, and assume the annual maintenance cost of eachmachine is negligible. Use 10% annual interest rate. Compute theAnnual Equivalent Cost (AEC) of each machine and enter the AEC ofthe machine that should be purchased as a positive number."

Answer & Explanation Solved by verified expert

3.6 Ratings (601 Votes)

See Answer

Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:

Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!

Become a Member

Transcribed Image Text

"Machine A costs $27,000 to purchase and is worth $9,000 in 4years at the end of its service life. Machine B costs $20,000 topurchase and is worth $1,000 in 4 years at the end of its servicelife. Assume that these machines are needed for 4 years (requiredservice period). Each machine can be repurchased at the same pricein the future, and assume the annual maintenance cost of eachmachine is negligible. Use 10% annual interest rate. Compute theAnnual Equivalent Cost (AEC) of each machine and enter the AEC ofthe machine that should be purchased as a positive number."