Problem:
Automated Manufacturers uses high-tech equipment to produce specialized aluminum products for its customers. Each one of these machines costs $1,480,000 to purchase plus an additional $52,000 a year to operate. The machines have a 6-year life after which they are worthless.
Required:
Question: What is the equivalent annual cost of one these machines if the required return is 16 percent?
- -$301,586
- -$295,667
- -$256,947
- -$453,657
- -$427,109
Note: Provide support for rationale.