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A company considering purchasing equipment that costs $5,000,000 today and costs $100,000 per year to operate starting one year from now. It will last for
A company considering purchasing equipment that costs $5,000,000 today and costs $100,000 per year to operate starting one year from now. It will last for 12 years when it will be sold. Its is expected to have an after-tax salvage value of $500,000 when it is sold in 12 years (immediately after incurring the 12th year of operating costs.) What is the effective annual annuity of this project if the firms cost of capital is 7%?
($72,049.01)
(723,919.74)
($701,558.95)
($729,509.94)
($100,000.00)
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