What is the minimum amount of annual revenue

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A company would like to purchase a machine for $200,000 with a life of 11 years. They estimate the salvage value to be 6% of the initial machine cost. If other operating costs are estimated to be $30,000 per year. The interest rate the company uses to justify their investments is 5% per year compounded yearly.

a. What is the capital recovery cost?

b. What is the minimum amount of annual revenue ($? per year) that makes this investment an attractive option for the company?

Reference no: EM132538932

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