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A mining company has invested in the purchase of a new machine costing $100,000 and it plans to use it for five years. In the first year of use, the operation & maintenance costs will be $20,000 and then will increase by $2,500 per year. The salvage value of the machine at the end of its service is estimated to be $20,000. The company’s MARR is 9%.

A) Determine the annual capital cost (ownership cost) for the machine.

B) What is the annual equivalent cost of owning & operating the machine?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92405988

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