What is the equivalent annual cost of each machine

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Question - Jackson & Sons uses packing machines to prepare its products for shipping. They need to replace their primary packing machine and are considering two different options.

Machine 1 costs $404,100 and lasts 5 years before it needs replaced. The annual after tax operating cost for the machine is $35,100.

Machine 2 costs $545,600 and should last for 8 years. It has an annual after tax operating cost of $23,100.

Required - What is the equivalent annual cost of each machine if the required return is 17 percent?

Reference no: EM133153820

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