A. What is equivalent annual cost. In which type of business investment decisions is it appropriate to calculate equivalent annual cost?

B. Mountain Corporation is considering purchasing one of two photocopiers. The first copier will have an initial cost of $110,000 and will have operating costs of $21,000 per year during its 7 year life. The second photocopier will cost $135,500 and will have $22,000 per year during its 10 year life. If the company's required rate of return is 7%, determine the equivalent annual cost of each machine.

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