Fruit Packers uses packing machines to prepare its products for shipping. Each machine costs $136,000 and lasts about 4 years before it needs to be replaced. In addition, the operating cost per machine is $6,000 a year. What is the equivalent annual cost of one packing machine if the required rate of return is 12%? Ignore tax. The annuity factor is 1/r-1/[r*(1+r)^n

Fruit Packers uses packing machines to prepare its products for shipping. Each machine costs $136,000 and lasts about 4 years before it needs to be replaced. In addition, the operating cost per machine is $6,000 a year. What is the equivalent annual cost of one packing machine if the required rate of return is 12%? Ignore tax. The annuity factor is 1/r-1/[r*(1+r)^n

EBK CFIN

6th Edition

ISBN:9781337671743

Author:BESLEY

Publisher:BESLEY

Chapter10: Project Cash Flows And Risk

Section: Chapter Questions

Problem 12PROB

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