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Future Semiconductor is considering the purchase of photolithography equipment that will cost $3 million. The equipment requires maintenance of $5,000 at the end of each of the next five years. After five years it will be sold for $500,000. Assume a cost of capital of 15% and no taxes. What is the present value of the cost of the equipment? What is the equivalent annual cost of the equipment?

a. $3,016,761; $899,947

b. $2,516,760; $750,789

c. $2,407,106; $718,077

d. $2,768,172; $825,789

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Financial Accounting, Accounting

Category:- Financial Accounting
Reference No.:- M91970386

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