In: Finance
"Machine A costs $39,000 to purchase and is worth $10,000 in 5
years at the end of its service life. Machine B costs $13,000 to
purchase and is worth $2,000 in 3 years at the end of its service
life. Assume that these machines are needed for 15 years (required
service period). Each machine can be repurchased at the same price
in the future, and assume the annual maintenance cost of each
machine is negligible. Use 13% annual interest rate.
Compute the Annual Equivalent Cost (AEC) of each machine and enter
the AEC of the machine that should be purchased as a positive
number."