A machine costs to purchase and per year to operate

Accounting Dec 18, 2020

A machine costs to purchase and per year to operate. The machine has no salvage value, and a 10-year life.

If per year, compounded annually, what is the equivalent uniform annual cost (annual worth) of the machine?

Expert Solution

The uniform annual cost is 16,510. Let C be the uniform annual cost, then the discounted lifetime cost is must have . The capital cost plus the operating cost is . To find value for C, set

, which gives C = 16,510.

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