(6) 3. A company considers purchase of processing machinery costing $50,000. A loan is taken out to pay for the machinery, with an interest rate of 8%. The cost data is summarized as follows: Item Capital investment Estimated life Maintenance costs Cost $50,000 20 years $5,000 per year for the first 12 years $7000 per year for the next 8 years $10.000 Overhaul in year 12 Which of the following equations best describes the calculation of Annual Equivalent Cost? (Calculations are not needed. Brief statements of reasoning may be beneficial.) a) PW (8%) = $50,000+ $5,000(P/1.8%, 12)+$7.000(P/A,8%,12)(P/F.8%,8) +$10,000(P/F,8%,12) AEC(8%) = (PW (8%)(A/P.8%, 20) b) CR(8%) = (1 - S)(A/P.1,N)+iS = ($50.000 -SO)(A/P.8%. 20)+(.08)(50) AEC(8%) = CR(8%)+$5,000(A/P,8%,12)+$7,000(A/P,8%,8)+$10,000(A/F.8%,12) c) AEC(8%) = CR(8%)+O & M(8%) CR(8%) = (1 -S)(A/P./.N)+iS = ($50,000 - 50)(A/P 8%, 20)+(.08)(50) AEC(8%) = CR(8%) +$5,000(P / 4,8%, 12)+$7.000(P/A, 8%,8)+$10,000(A/F.8%,12) d) Both and above are correct